We’re all in this together: 5% pay cut mooted at Guardian and Observer as papers seek cuts

 

The struggle to reduce costs at the Guardian and the Observer to a manageable level will be one of the biggest media stories of the next 12 months, particularly if journalists strike in an attempt to save jobs. On Wednesday 12 December, managers at the papers wrote to staff outlining some ideas on how this might be achieved. The figures are in the email below so I won’t repeat them all here, but some are worth highlighting. The NUJ marched on to the moral high ground some weeks ago (see a previous post) by suggesting top executives – those earning 100k or more – might consider taking a pay cut in a bid to save jobs at the paper. Weeks late (see last post) management said 68 jobs would have to go. A good number of those are likely to go through compulsory redundancies, unless there is a last minute rush to apply for voluntary redundancy or significant savings can be found elsewhere.

Today, management told staff some executives had signalled they might well be willing to take a pay cut. But they also said in an email that if a 5% cut was imposed on all those who earn six figures, the exercise will only save £230,000 per annum – enough to save 3 journalists jobs. The calculation is made on the basis that the average journalistic salary at the papers is £64,800 – or £74,800 when National Insurance and other payments are taken into account. This has caused a degree of disquiet amongst some Guardian and Observer staff.  The average sounds very high. If it has been calculated by dividing the total salaries paid by the number of editorial staff, it will be distorted by the handful of employees who earn 100k or more, including editor-in-chief Alan Rubridger. Rusbridger is paid around £400k.

If a median figure was used instead, it would be far lower, and more accurately reflect the typical pay of a jobbing journalist. That figure can’t be calculated without looking at the Guardian and Observer’s books, but it is likely to come in at closer to £40,000 or £50,000. So a 5% pay cut for those earning £100,000 or more could actually save 5 or 6 reporting jobs.

If those same execs were to follow the example set by Rusbridger, who it was announced earlier this year will take a 10% pay cut (and smaller pension payments), the amount saved would be twice as high – and 10 or 12 ‘average’ journalists might be saved. That is a significant number, and a 20% cut might increase it to 20 or more – close to a third of the redundancies currently planned.

Similarly, the company says scrapping sabbaticals – the majority of journalists are entitled to 4 weeks unpaid sabbatical every four years – would save £500,000. Using the £74,800 figure, that equates to 7 jobs. The figure would be ten jobs if a median figure of £50,000 was used.

A pay freeze would save £0.88m a year - 12 jobs according to management – and a 5% across the board pay cut £2.29m – or 29 jobs. Again, that depends on what a typical reporter is paid. While some well-paid executives could theoretically be made redundant, the vast majority of job cuts will clearly fall on the regular reporters, sub-editors, designers and picture editors who are paid far less. It makes for a terrible, anxious Christmas for all staff, but the simple fact is a 5% cut for a well-paid exec is less painful than a pay freeze (in real terms, a cut) for a junior or middle-ranking journalist. To their credit, management said today low paid staff could be exempt from such a freeze. But it would be reassuring for readers if Guardian managers read their own editorials and agreed that when it comes to forcing through cuts, the burden should be shouldered by those who can most afford it.  

The NUJ at the Guardian and the Observer is asking members to support a strike ballot at a meeting tomorrow lunchtime (Thursday 13 December). You will be able to read about the outcome here.

 

 

12th December

Dear colleagues,

We are writing ahead of the chapel meeting to update you on our talks
with NUJ officials.

The NUJ have asked us to clarify the savings target for this year and
next. At the time of writing we have a target of achieving at least
£6m in 2012/13 and £7m in 2013/14. The 2013/14 savings will include
any saving carried forward from 12/13. These figures only relate to
editorial savings, as other savings, for example on office costs,
contribute to the wider GNM target.

Both the union and the management are agreed on the need to find the
savings now. There has been some speculation in other papers about
asset disposals. When we do exit from our investments then the cash
will be transferred to a fund that will be used to cover our losses.
However, the less we put into that fund the smaller the return. And it
is inconceivable that we can use that fund to maintain losses at their
current level of £50m. It is possible that we could fund losses of a
manageable level of nearer to £10m.

The enhanced redundancy offer closes on Friday and we hope that — in
line with the survey conducted by the NUJ and ACAS earlier this year —
more people will come forward to take advantage of these terms. At the
moment though the 2012/13 savings stand at about £0.9m and the 2013/14
savings at £2.7m (35.8 full-time equivalents). We will not achieve the
target for 2012/13 but nonetheless we have to maximise the savings we
can make now.

After December 14, any redundancies will be made on the old terms.
These are still very generous terms which may have to be reviewed in
future years.

We are engaged in a 90-day consultation period so that we can explore
every possible option to avoid the position where we may have to make
compulsory redundancies. We would not contemplate having to resort to
compulsory redundancies were these not exceptional circumstances. We
therefore ask the staff to consider every available option in terms of
editorial budget savings.

The NUJ has expressed a desire to negotiate a settlement so we thought
it would be helpful to show how different proposals could affect how
the savings total is achieved. Some of these ideas came up in recent
staff meetings with Andrew Miller and Alan Rusbridger.

We have taken on board one of the Chapel’s proposals in relation to
staff earning more that £100,000p.a. We have written to these members
of staff and asked them to consider a reduction in salary. We have
some positive responses to this and when we are able to, we will
inform you of the total savings achieved. If everyone on that salary
range took a 5 per cent cut that would equate to savings of about
£230,000 or roughly 3 jobs*.

Another suggestion has been to look at reducing the number of casuals
we employ. We are prepared to explore this, but as some people are not
available to work weekends or lates, even though they are on 9-day
fortnights, and as people do not spread holidays or sabbaticals evenly
through the year, then casual cover is inevitable and indeed
invaluable. We believe removing 9-day fortnights for people who are
currently working a Monday to Friday pattern could save us about
£250,000 a year or 4 jobs*.

Savings on sabbaticals would also be an alternative to job losses.
There is some disagreement about the savings that could come from
ending them but if it saved, say, £500,000 that would equate to 7
jobs*.
A pay freeze next year would also reduce the savings task. This would
be a big step — but it would help demonstrate that we recognise the
severity of the situation facing us and would be a step towards the
sustainable future that does exist if we reduce costs now. We have
budgeted a 2 per cent rise for next year. If that were foregone it
would save £0.88 million or 12 jobs*.
And, finally, touching on something that a few years ago would have
been unthinkable; would the staff consider accepting a pay cut? A 5
per cent reduction in pay would save, say, £2.2m or 29 jobs* – and of
course we could look at options which exclude the lower paid or go for
different rates at different salary levels.

Worked examples

SAVINGS TARGET £7.0m
Minus sabbaticals £0.5m
Minus salary cut 5% £2.2m
Minus some 9-day
Fortnights £0.25m
Current VRs £2.7m

Remaining savings/VRs needed: £1.35m or 18 more redundancies

SAVINGS TARGET £7.0m
Minus sabbaticals £0.5m
Minus salary cut 2% £0.88m
Minus some 9-day
Fortnights £0.25m
Current VRs £2.7m

Remaining savings/VRs needed: £2.67m or 35 more redundancies

These examples are only illustrative but show different ways of
reaching the target. Of course there will be different opinions about
what should and shouldn’t be considered.

Some people may feel that mitigating the headcount reduction through
changes to terms and conditions is not the right approach and that it
would be better if we continued to seek the remaining redundancies.
Without a reduction in heads it will be harder to make other savings
and harder to get a reduction in output.

Following a suggestion from some union members we have been having a
look at how the redeployment register could work as a way of reducing
headcount within departments. You can find details of that policy
here:

We would be interested in views as to how this might work given the
current situation, as we want to explore all mechanisms to produce the
required savings.

We look forward to hearing proposals about ways we can reach the
savings target from within the editorial budget.

Sheila and Jan
*average FTE NUJ salary is 60.8k or 74.8k including on-costs

 

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