EIRCOM HAS told its trade unions that it wants to cut 1,250 jobs from its 7,500-strong workforce over the next 18 months as part of a series of measures aimed at achieving savings of about €130 million a year in its cost base.
It is understood that Eircom has told the unions that it will implement compulsory redundancies if staff do not accept a voluntary severance package in sufficient numbers.
This would be the latest jobs blow in the economy, with the live register forecast by some commentators to top 500,000 this year.
Management at the telecoms group are determined to rein in the company’s costs as Eircom feels the effects of the recession and strives to service its €3.8 billion debt. The company also needs to spend hundreds of millions upgrading its network.
While thousands of workers have been made redundant at Eircom over the past decade, these have always been on a voluntary basis.
Discussions between management and unions are believed to have been under way for about six weeks. Sources said they are at a “delicate” stage, but that progress has been made. Eircom is also seeking pay cuts of 5 per cent from staff, which would last for two years. Management have already accepted a 10 per cent pay cut. Many bonuses have been cut and expense payments are also being reduced.
In addition, the telecoms company wants to engage with unions on plugging a €433 million deficit in its pension scheme.
It is understood that Eircom expects to achieve about €65 million in annual cost savings from the redundancies.
Steve Fitzpatrick, general secretary of the Communications Workers’ Union (CWU), acknowledged that the unions were in talks with Eircom on a major restructuring of the business. “What we are attempting to do with the company at the moment is work through a financial restructuring plan to assist it through its current difficulties,” Mr Fitzpatrick said.
“That has been ongoing for a number of weeks and we haven’t concluded it yet. Substantially, a lot of things have been agreed but there are still some outstanding issues.”
Mr Fitzpatrick indicated that the unions would resist compulsory redundancies, but added that they were willing to work to find ways of restructuring the business.
Securing the desired number of redundancies could be complicated by the fact that a large number of long-serving staff have contracts similar to those offered to civil servants.
These date from the time when Eircom was State-owned and it would make it difficult to implement compulsory redundancies for those employees.
The company’s workforce includes a large number of contractors. It is understood that about 60 per cent of the 1,250 proposed job cuts would be from the permanent staff.
Eircom’s future ownership was thrown into doubt this week. On Thursday, an Australian-based group of former Babcock Brown executives made a A$175 million (€97 million) cash offer for Eircom’s parent, Sydney-based listed fund Babcock Brown Capital Ltd (BCM).
TaemasBridge, which is led by Rob Topfer, the architect of Babcock’s 2006 takeover of Eircom, is proposing to use the cash on BCM’s balance sheet to pay shareholders A$1.05 a share for the business.
A vehicle called Liffey Bridge would then control the assets of the company, which comprise Eircom and the Israeli Golden Pages.
TaemasBridge is planning to take A$5 million in fees annually from Eircom and said it would seek to use a “looming default” on its debt to negotiate more favourable terms with its lenders.
Fine Gael yesterday called for Eircom to be privatised. Taoiseach Brian Cowen said he would await a briefing from Minister for Communications Eamon Ryan before making any comment. Mr Fitzpatrick said the CWU was “strongly opposed” to the proposed takeover of Eircom.
