Major newpaper and media group introduce pay freeze

The large media company, Independent News and Media, has announced pay cuts for staff in Ireland earning over €40,000. Employees earning less than that amount have been asked to take a pay freeze. The company is seeking the individual consent of each worker, but has ruled out any third-party labour conciliation on the issue, in addition to withdrawing from the main Irish employer organisation. This move has caused some concern, not least among trade unions.

Independent News and Media PLC, which owns newspaper titles around the world, is to cut the wages of employees working on its two main Irish newspaper titles, the Irish Independent and the Sunday Independent. Staff have been asked to take a pay freeze or a salary reduction of between 2.5% and 10% in a bid by management to reduce overall wage costs in the current economic recession in Ireland. A share option scheme is being offered in return for the pay changes.

Trade union members have been asked to sign individual consent forms to fully accord with existing employment laws – a move that would formally allow management to make the deductions. This is because, under payment of wages legislation, each employee must have a contract of employment. By securing individual consent, therefore, Independent News and Media would be on solid legal ground in making the pay cuts.

Management has also stated that it will not be paying the total national wage increase of 6% over 21 months due under the recently ratified [Transitional Agreement (2.8Mb PDF)](http://www.taoiseach.gov.ie/attached_files/Pdf files/Taoiseach Report_web.pdf) (IE0810019I, IE0812019I), within the framework of the [Towards 2016 (2.9Mb PDF)](http://www.taoiseach.gov.ie/attached_files/Pdf files/Towards2016PartnershipAgreement.pdf) national social partnership agreement (IE0606019I).

Detail of pay cuts

The proposed amendments to the terms and conditions of employment of the employees concerned will mean a permanent reduction in annual salary. The plan is graded according to current earning levels, with the lowest paid workers being protected against a pay cut. Staff earning €40,000 or less will be asked to take a pay freeze only. Those earning between €40,000 and €50,000 will have their pay cut by 2.5%, while a 5% pay cut will apply for those earning between €50,000 and €100,000. A 10% pay cut will apply for those earning over €100,000.

The National Union of Journalists (NUJ) and the Services, Industrial, Professional and Technical Union (SIPTU) have also been told that the company will be seeking to withdraw or reduce allowances.

To potentially compensate for the pay reductions, the Independent News and Media Group is to introduce a new share option scheme for staff, which will be equivalent to two and a half times each salary reduction.

No third parties

In a move that has wider implications for the industrial relations system in Ireland, Independent News and Media also stated that it will not be attending any national conciliation on this issue at the state’s two main dispute resolution agencies, the Labour Court (An Chúirt Oibreachais) and the Labour Relations Commission (Coimisiún um Chaidreamh Oibreachais, LRC). Furthermore, the Group has relinquished membership of the main employer organisation, the Irish Business and Employers Confederation (IBEC), which formally ratified the Transitional Agreement on 17 November 2008. National pay agreements, however, are not legally enforced under Ireland’s traditionally voluntary industrial relations system.

For observers of industrial relations, the company’s decision to opt out of the national-level pay arrangement, as well as conciliation by the state dispute resolution agencies, has not come as a surprise. In an earlier dispute in 2004, management refused to attend the Labour Court, despite a request from the special trouble-shooting social partnership organisation – the National Implementation Body (IE0103233N) – in relation to a then controversial redundancy plan.

Views of social partners

The Independent’s two titles are major sellers in Ireland, and this decision will be regarded by guardians of the formal industrial relations system – which dates back to the establishment of the Labour Court in 1946 – with some concern.

A trade union spokesperson told the weekly industrial relations magazine, Industrial Relations News (IRN), that the move was ‘striking at the heart of union recognition’. The trade union source suggested that the Independent’s management would know who supported its position and those who did not, and this was of considerable concern to the unions.

Meanwhile, a management spokesperson explained that the rationale behind its decision was due to the fact that many of those concerned, and those making the largest contribution to the pay cut, were non-unionised management who did not enjoy the same protection as unionised employees. The management representative asserted that it had chosen not to carry out two processes, one for those who are unionised and one for those who are not. Instead, the programme, particularly the share option scheme, was innovative and represented an attempt to share the burden.

The company spokesperson noted that there has been a good take up of the share offer. In the medium term, the management representative added, redundancies were not an option but they could not be ruled out in the future.

Other media companies also cutting costs

Other Irish media organisations have also taken initiatives to save costs. Irish Times Ltd recently announced a pay freeze and up to 60 voluntary redundancies for those working on its national daily newspaper, The Irish Times. Meanwhile, the state-owned company Radio Television Ireland (Radio Telefís Éireann, RTE) has introduced a six-month pay freeze.

Brian Sheehan, IRN Publishing