eircom agrees restructuring deal, but 1,200 jobs to be lost

13 May 2009

Irish former monopoly operator eircom has agreed a restructuring deal with union officials under which 1,200 jobs will go over the next two years, equivalent to 16% of its workforce. The telco says the agreement includes a pay freeze until June 2011 and will also involve a 25% cut in certain staff allowances such as subsistence and mileage rates. In addition, there will be no performance-related bonuses for the current financial year and in the following two years. The deal is the first part of a major restructuring agreement for the operator in which it intends to realise annualised cost savings of EUR130 million by the financial year 2010/11. Further talks on this plan are to begin ‘immediately’ it said. It is understood eircom is looking for voluntary salary cuts from management in the region of 10% and 5% for all other staff. Although such measures are classed as voluntary, the board considers them ‘essential’. Commenting on the agreement, eircom acting chief executive office Cathal Magee said management and unions alike had agreed to implement ‘difficult but necessary decisions to ensure the long-term competitiveness of eircom’.

In the wake of the agreement, the Communications Workers Union (CWU) has called on the government to intervene to protect the long-term future of the incumbent. eircom is struggling with debts of EUR3.8 billion and although the CWU is working hard with management, it says it is difficult to see where further cuts can be made without severely undermining eircom’s activities.

Ireland, eir