Eircom’s 1,200 staff cuts ‘only a first step’

EIRCOM’S plans to axe 1,200 jobs by mid-2011, while not officially confirmed until yesterday, had been widely expected since March.

At that point the company launched a three-week “root and branch” review of its operation in response to the pre-tax loss of €791 million for the first half of its financial year and the €433m deficit in its pension scheme.

Among its first moves were to cut senior management pay by 10% and the rest of management remuneration by between 5%-10%.

Yesterday the company’s acting chief executive, Cathal Magee, confirmed the job losses, two-year pay freeze and 25% reduction in staff allowances was only a first step.

“Management recognises the very significant impact of the current economic environment and is committed to securing far-reaching cost reductions, and an overall vision and strategy framework for the business,” he said.

However, unions questioned just how far further reductions can go.

Steve Fitzpatrick of the Communication Workers Union said with existing figures of 5,000 employees and 2,000contractors, an almost 20% reduction in staff would have a severe impact on the services the workers could provide. He said to reduce staff numbers by even more could send the company into a downward spiral.

Mr Fitzpatrick pointed out the collapse of Eircom would have severe consequences for more than just staff. The network is what most communications providers base their service on and without it, the rest would not be able to operate.

For the workers there is also the fear that any job loss could impact on them much more than the thousands of others losing their jobs in the private sector.

Steve Fitzpatrick said many of the staff had been transferred from what were public sector jobs when Eircom was state-owned, to private sector when it was privatised.

They had not been paying full PRSI previously and so would not be entitled to full social welfare payments, he said.