Page last updated at 17:46 GMT, Thursday, 13 November 2008

BT to shed 10,000 jobs by March

BT van

Telecoms giant BT says it expects to have cut 10,000 jobs by the end of March next year to reduce costs.

The cuts will mainly affect agency and contract staff, including offshore workers, the company said.

BT said it had already cut 4,000 jobs, with a further 6,000 to go by March from its global workforce of 160,000.

News of the cost cuts sent BT shares 7.5% higher. The company said the job losses were not a "direct result" of the economic downturn.

"This is a reflection of the fact we have to become leaner," BT chief executive Ian Livingston told the BBC.

"We need to do it in good times and bad."

Many of the job losses will be in the UK, with about 4,000 staff positions affected.

Further cuts

BT was followed by three more UK companies who announced they planned to reduce their workforces.


It's a real blow especially at this time of year

BT employee, South Yorkshire



Construction equipment-maker JCB announced a further 398 redundancies on top of the loss of 178 posts it revealed last month, after a fall in orders.

It blamed "the extreme deterioration" in business levels and confidence around the world.

Truck maker Leyland also spoke of a "severe decline" in demand which it said will result in the loss of 250 jobs.

Financial services firm Friends Provident will cut 280 posts, it said.

The announcements came a day after government figures showed unemployment in the UK had reached its highest level for 11 years.

Workers concerned

Mr Livingston said that he did not expect to make compulsory redundancies.

Workers nevertheless expressed concern at the announcement and said BT was keeping them in the dark.

"I think if the company are going to shed this many UK jobs then it should have informed the staff before we found out on the news," one employee in South Yorkshire told the BBC News website.

"The centre I am in is nearly all agency staff, so where do we stand?"

"It's a real blow especially at this time of year."

Investors upbeat

Figures released on Wednesday showed that the UK unemployment total reached an 11-year high of 1.82 million in the three months to September, as more firms cut jobs to cope with the economic slowdown.

BT's chief executive Ian Livingston says redundancies will not be compulsory.

However, BT's job losses, which will lead to lower costs, cheered investors.

BT shares were up 11%, or 12.5p, at 125p in afternoon trade on the London stock market.

"The group's marked intention to improve profitability could see another turn in investor sentiment, this time upwards," said Keith Bowman, equity analyst at Hargreaves Lansdown stockbrokers.

'Decisive action'

BT said that three of its four main business units were performing well, but said profits at its global services division "were simply not good enough".

"We are taking decisive action to put matters right," Mr Livingston said.

The firm said it had already replaced the head of the division.

The job losses come as the firm announced a 11% fall in pre-tax profit for the July to September quarter.

Pre-tax profits totalled 590m and the firm said revenue rose 4% to 5.3bn.

Last month, BT had warned that its global services division, which provides IT networks to multinational businesses, would report lower profits. Its shares fell nearly 20% on the news.

Pension

The company revealed that it hoped to save 100m in pension contributions each year when, next April, it brings in radical changes to its final salary scheme, announced earlier this week.

The changes will reduce pension entitlement for 65,000 members of the final salary scheme, which was closed to new joiners in 2001.

The scheme's normal retirement age will rise from 60 to 65, future pension entitlement will build up at a slower rate, the traditional link between final salaries and pension payments will be broken, and some members will have to pay higher contributions.

The changes are being brought in despite the fact that the BT scheme was still in surplus as of 30 September to the tune of 600m, based on the standard valuation method for company accounts known as IAS 19.

However, a BT spokesman pointed out that it was still paying in an extra 280m a year to pay off a deficit revealed by a previous actuarial valuation three years ago.

The next full actuarial valuation will be based on the state of the scheme as of 31 December and, depending on the assumptions used about longevity and future investment returns, may show that the scheme would be in deficit but for the impact of the cost-saving measures.

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SEE ALSO
Unemployment reaches 11-year high
12 Nov 08 |  Business
BT cuts final salary pension link
11 Nov 08 |  Business
BT shares slump on profit warning
31 Oct 08 |  Business

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