JLR workers accept pay freeze

S Kalyana Ramanathan / London March 07, 2009

Workers at Tata Group-owned car-maker Jaguar Land Rover (JLR) have agreed to a pay freeze until 2010 to avoid compulsory redundancies in the non-management workforce over the next two years.

Around 70 per cent of the workers, who participated in a ballot that lasted over one-and-a-half week, agreed to the new deal that will also help JLR save around £68 million annually. Around 12,000 people work at JLR units spread over six locations in the UK.

JLR’s chief executive officer David Smith said in a statement: “This is an important step for us as a standalone business. It also confirms our determination as a team to steer JLR through these extraordinary and challenging times, so that our business is ready to take advantage when the downturn finally ends. I am also pleased that the company and trade unions have been able to work together so constructively when dealing with such sensitive issues.”

A separate statement by GMB and Unite, the two unions representing JLR workers, said, “We did not want our members in JLR to be faced with the same fate as the thousands of others who have been dismissed in other companies. Our members in JLR deserve better — much better.

The management agreed with our view that, when this unprecedented recession ends, the retention of a skilled and loyal workforce is an integral part of the ongoing success of this business.”

Key elements of the package include a pay freeze until 2010, no compulsory redundancies in the non-management workforce in the UK over the next two years, a four-day week at the plants (from a two-hour reduction in the working week for hourly-paid employees, but with only a one-hour reduction in pay) and a 40-hour working week for salaried employees (as opposed to the current 37 hours) with no increase in pay.

The new deal also gives JLR’s management the option to move its workers across the JLR’s West Midlands sites.

Further, JLR will not have to pay bonus to 2,400 salaried employees, which was scheduled for 2009. However the company has agreed to an increase in employee pension contributions and introduction of a salary sacrifice scheme.

All these measures are expected to achieve savings of around £68m, which will make a significant contribution to the company’s crucial cost reduction targets, the JLR statement said.

The company will continue to keep open the option of offering voluntary redundancy and sabbatical programmes. Over the last few months, the company has been saving costs, partly by offering voluntary redundancy programmes which when completed will result in reduction of the total workforce by 2,000 in the next few months.

Other companies in the UK, like Nissan and Honda, have either announced job and production cuts or temporary plant closure to overcome the fall in global demand for automobiles.