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Research

Analysis of financial and economic information to support the 2004/05 pay claim at BT. Research. Bill Taylor – CWU ILO Turin August 11/12 2005. Research. Areas to cover. When deciding on the pay claim at BT we looked at: Pay comparisons The economy Company performance and strategy

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Research

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  1. Analysis of financial and economic information to support the 2004/05 pay claim at BT Research Bill Taylor – CWU ILO Turin August 11/12 2005

  2. Research Areas to cover When deciding on the pay claim at BT we looked at: • Pay comparisons • The economy • Company performance and strategy • Regulation and market pressures • Staffing and productivity • Quality of Service and Employee attitudes

  3. Research Pay • History of BT pay settlements For most years since 1984, pay has risen by more than the rate of inflation • Allowances Last year some allowances were not uprated • Pay for CWU grades compared with executives 1997-2000 CWU grades pay rose 24% whilst CEO pay rose 162% • Pay comparisons outside BT BT pay tends to be in the upper quartile of pay for comparable jobs

  4. Research The Economy • The economic outlook Treasury expected GDP to grow 3% - 3.5% in 2005 • Employment One of highest levels recorded (4.7% unemployed) • Current and forecast inflation 3.4% in Nov 04, expected to be 3.5% in March 05

  5. Research The Economy • Recent pay settlements Whole economy median 3.0%, upper quartile 3.2%, lower quartile 2.5% Private sector median 3.0%, upper quartile 3.4%, lower quartile 2.5% Individual settlements: Manx Telecom 5.5%, HVD Engineering 4.5% • Movements in earnings Currently 4.1%, expected to rise 4.4% in 2005 (includes overtime, bonuses and incentive payments)

  6. Research Company Performance • BT’s financial performance Turnover flat, pre-tax profit up 4%, net debt down 6%, share dividend up 22%, new wave turnover up 34%, offset 6% decline in traditional turnover • BT annual general meeting Chairman tells of strong financial performance at BT Intention to remain a good employer with good working practices Commitment to invest in UK based call centres • BT’s financial prospects Depends upon: market growth, competition, new wave strategy, regulation, debt management

  7. Research Regulation and Market Pressures • Regulation Encouraging more competition Equal access to BT’s network Deregulating in some areas Regulatory certainty enables investment in 21CN • UK Market Growth Growth in Information Communications Technology (ICT), mobile, broadband Broadband growth rate 17% (50,000 a week) • BT Market Share Decreasing in fixed and broadband as competition increases Starting out in mobile Strong in ICT

  8. Research Company Strategy • Defend traditional • Grow new wave • Reduce customer dissatisfaction • 21st Century Network Huge investment required Will make demands of staff Will help cut costs Will help deliver new compelling services eg Broadband TV • International Operations Strategic acquisitions focus on ICT strategy (Albacom, Infonet)

  9. Research • Staffing Levels Reducing in a drive to cut costs – down from 215,366 in 1991 to 99,900 in 2004 • Staff costs as a proportion of Operating costs Down from 45% in 1991 to 20% in 2002 Up again to 28% in 2004 due to further decrease in operating costs • Productivity Measures • Compare productivity historically within BT – like for like comparison • Turnover per employee decreased slightly, but still strong at £189,329m • Pre-tax profit per employee decreased significantly, but still strong at £19,499 Staffing and Productivity

  10. Research The Company • Quality of Service Overall customer satisfaction levels improved during the year • CARE Survey (survey of employees’ attitude) Only 36% of respondents agreed that ‘overall I am paid fairly compared with people in other companies doing similar jobs’

  11. Research • Current and forecast inflation – 3.4% and 3.5% • Current and forecast pay settlements - median 3.0%, UQ 3.2% • Company Performance – pre-tax profit up 4%, new wave turnover up 34%, net debt reduced. • Need to motivate to deliver business transformation • Contribution to change and new wave growth • Achieving improvement in customer satisfaction • Submit pay claim for 6% in all pay rates and allowances Conclusion

  12. Research • Questions and discussion

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