Could informal talks save BT from "commercial suicide"

The result of the ballot of over 50,000 BT workers, over whether they want to strike or not, will be known on Monday (05 July).

A source told me that only informal talks have occured during the ballot with no formal pay negotiations so it looks like there will be industrial action if workers have the appetite for it.

The Communications Workers Union sent papers to members asking them what they want to do and recommending they vote for industrial action.

Both the Union and BT are keen to avoid strike but there has been no meeting in the middle.

The union wants a 5% pay rise but BT only wants to give a 2% rise.

A strike would be the first of its kind for over 20 years and could cause major disruption for businesses.

These days there is a lot of competition tpo BT and a strike could play into the hands of these alternative service providers.


Why the union is not happy:

• BT made in excess of £1bn profit last year and exceeded forecasts by doubling its free cash flow to £1.9bn while making £1.75bn in cost savings – partly delivered through a pay freeze, 30,000 redundancies and changes to pension schemes, which CWU helped the company with.

• CWU rejected BT’s offer of 2% plus £250 and a possible additional £250 based on meeting undisclosed targets next year. BT has claimed that the total payments would be equivalent to a 5.4% pay rise. However, this would only be true for seven people in the company who earn a salary of just over £14,000 and the final £250 would not be paid – if at all – until June 2011.

• A pay deal of 5% for CWU grades would cost the company 3.6% of free cash flow.

• BT executives have received generous bonus payments, including:

• Ian Livingston CEO – basic £850,000 plus annual bonus of £1,206,000, total up by 79% on 2009. He is also set to get a 6% pay rise this year, but has pledged to take a 2% pay rise and donate the rest charity.

• Michael Rake, chairman, total of £670,000 up from £630,000 – a 6.3% rise – in 2009 for working part-time.

• Hanif Lalani, ex-finance director, total of £1,166,000, up from £805,000 in 2009, a rise of 44.8%.

• Patricia Hewitt, non-executive director who helps to decide remuneration – £128,000 up from £75,000 for just a few days a month.

• Gavin Patterson, BT Retail CEO, total of £1,133,000, up from £698,000 in 2009, a 62.3% increase.

•Tony Chanmugam, finance director, is set for a pay rise worth more than 7%.