Eircom plans to axe jobs as staff vote on wage cut
DEBT-laden Eircom has asked thousands of staff to take a 10pc pay cut and is planning to axe a further 1,000 jobs over the next three years, the Irish Independent has learned.
The Communications Workers Union said yesterday that the proposed pay cuts would be put to a ballot of members.
Non-unionised staff agreed to a 10pc pay cut last year.
A spokesman for the company confirmed last night that voluntary redundancies were inevitable but refused to be drawn on a specific figure.
"There will be voluntary losses, but I couldn't say what that figure will be," he said.
The cost-cutting plan comes at a critical time for the troubled former semi-state, which is saddled with €3.75bn in debt and under pressure from its lenders to pay back loans.
Sources added that with 6,000 full-time workers and over 1,000 contractors at Eircom, the company was still over-staffed, despite a recent redundancy programme.
"There is no way we can achieve the necessary savings without job losses but they will only be voluntary redundancies," one source said.
Eircom's lenders also want the company to come up with a business plan before they begin discussions on how the €3.75bn debt pile can be restructured.
The biggest lender, Dublin-based Harbourmaster, has joined forces with other debt holders to form a committee that will negotiate with Eircom.
Since Eircom was privatised by the government in 1999 it has had a string of owners, until it was sold to Singapore Technologies Telemedia (STT) last year for €140m.
The previous owner, the Australian investment fund Babcock and Brown, did a €1.7bn refinancing deal which added to the company's debts.
Recent figures show that Eircom is struggling to maintain market share in a very competitive environment, while its revenues have also taken a hit. In the three months to the end of December, Eircom's revenues fell 6pc to €438m.
The pay cuts of up to €200 a month that were announced yesterday would hit the 4,000 union members. They will vote on the proposal later this month.
The plan is expected to achieve €92m in savings over three years, mainly through the pay cuts. Union members are now studying the rescue plan, which has just been circulated.
The document proposes that staff go on a nine-day fortnight, which is the equivalent of a 10pc pay cut.
The plan also involves new work practices, including rules forcing those who have untaken annual leave to use up their holidays by a certain date or forfeit them. Staff paid weekly will be moved to fortnightly payments, while expenses will also be reviewed.
The news of further job losses comes on the heels of figures showing that the number of long-term unemployed has risen dramatically.
Latest figures show the number of those who have been out of work for a year or more has risen by 52pc to 163,825 over the past 12 months.