Mobile phone giant fails to reach agreement with union over pay

Mobile phone giant O2 faces a summer of discontent following the collapse of pay talks with the Communications Workers Union (CWU).

The CWU is now recommending its members reject this year’s pay offer in a consultative exercise which is due to start next week.

If, as the CWU expects, members reject the offer and O2 remains unprepared to improve the terms, the union will ballot for industrial action.

CWU deputy general secretary Jeannie Drake, said: “Half the workforce is being told that they will not receive a consolidated salary increase for around seven years – and the other half that their automatic rights to progress to the maximum level in any salary band through yearly incremental rises are to be taken away and replaced with an unacceptable performance-based formula.”

According to the union, since O2 was spun off from BT in November 2001, the earnings potential of CWU members has fallen by 10% and that of new employees by 35%. During the same period, the pay of O2 chief executive officer Peter Erskine has risen by 76%, and that of other board members by similar amounts.

“Our members have done a first-class job in taking O2 to the top of the mobile league, and to record pre-tax profits of £1.7bn,” said  Drake.

“The O2 board is rewarding them by saying that increases in the cost of living and company profitability will no longer be factors in the annual pay round and that staff no longer have an automatic right to reach the pay rate for their job.”

In an earlier statement, O2 said: “Pay-for-performance is not about saving personnel costs – our current proposals actually create a bigger total pay pool than a single across-the-board rise.”

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