Eircom wants to slash up to 2,000 jobs at the former State-owned telecommunications giant in a devastating blow that will heap further pressure on Brian Cowen just days after the Government claimed the recession is over.
The Sunday Independent has learned that Eircom, saddled with debts of more than €3bn, is planning the largest redundancy package in the State since the downturn began three years ago.
The proposed job losses are greater than the 1,900 redundancies at Dell Computers last year and are on top of an existing programme of 1,200 voluntary redundancies at Eircom due to be completed by September.
Latest live register figures show that numbers signing on are now at a record 450,000, and further job losses at Eircom would inevitably call into question the Government's current economic policy, which is based solely on spending cuts to the exclusion of stimulus.
Finance Minister Brian Lenihan has admitted that unemployment remains unacceptably high.
"The best way to create and protect jobs is to return to economic growth," he said.
Eircom chief executive Paul Donovan has already warned that any future redundancies at the company would not offer the same generous severance payments offered in the current round of redundancies, which has generated 898 applications from staff so far.
Eircom is the largest telecommunications operator in the State, but just 11 years after it left State ownership and after burning tens of thousands of small investors who lost out during the share flotation debacle, the company is struggling.
In response to questions from the Sunday Independent on reports that they were seeking to shed 2,000 jobs during the next 18 months to two years, a spokesman for the company declined to either confirm or deny: "All I can tell you is that there are regular and ongoing discussions with our union partners about the company's transformation agenda. I cannot comment beyond that at this time."
The company spokesman said that the CEO, Mr Donovan, was travelling this week-end and was unavailable for comment.
A spokesman for the Communications Workers Union (CWU) said: "The National Executive Council of the Communications Workers Union will be meeting on Tuesday to consider its ongoing discussions with Eircom on the company's future direction. The CWU will not be making any further comment until its National Executive Council has met and it has had an opportunity to consult with its members."
Eircom's shareholders include the Employee Share Ownership Trust (Esot) as well as Singapore Telemedia Technologies (STT), which controls the company.
Last month, Steve Fitzpatrick of the CWU warned members at their annual conference the company could collapse within six months, putting 5,500 jobs in peril.
Mr Fitzpatrick referred to the company's enormous debt and the continuing loss of customers to competitors.
Revenues at Eircom fell seven per cent in the first quarter of this year, while core profits dropped by four per cent.
It remains the largest provider of fixed telephone lines in Ireland, with more than 700,000 customers, but both fixed-line and mobile phone revenues (through Meteor) have been on the slide.
Bond markets last month delivered a devastating assessment of the company, saying Eircom is now the fifth-riskiest company in the world in terms of its chances of defaulting or restructuring its debt.
Just five weeks ago, the company had its credit rating downgraded by Moody's, which said Eircom was not reducing its debt fast enough and lacked strategic direction.
The company is also one of the most indebted telecom companies in Europe at a time when it needs more cash to invest in updating its copper network to fibre optic cable which would allow it to deliver very high-speed broadband.
In May, Mr Donovan indicated that further job losses would be necessary but declined at that time to say how many more jobs the company would seek to shed.