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Macmillan US to freeze pay hikes

Source: PTI
December 11, 2008 17:10 IST
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Publishing firm Macmillan US will be freezing salary hikes for its employees earning more than $50,000 per month in the wake of economic crisis which has seen a decline in retail book sales.

The move to freeze pay increases would be effective from January next year but those getting below 50,000 dollars per month would be receiving modest hikes.

In an internal memo, chief executive of Macmillan US John Sargent said the actions for the next year comes as the company's business continues to be 'soft'.

"Effective from January 1, 2009, we will freeze salaries for everyone making more than $50,000. For those making under $50,000, there will be a pool for modest increases," Sargent wrote in the memo.

The chief executive noted that all bonus plans would stay in effect, but 'all are sensitive to individual company profitability and individual performance. Thus the impact on individual bonus plans will vary'.

Many media publishing companies worldwide are embarking on cost-cutting measures including layoffs in certain cases, to tackle the deepening financial turmoil.

Observing that the country is clearly in recession, Sargent pointed out that there is still no clarity on how long or deep it would be.

"What is clear is that retail book sales are down, advertising revenues are down, and even countercyclical businesses like education are struggling in many cases. We are not immune to these forces, and our business continues to be soft.

"So the time has come to take action for next year," Sargent said.

Pointing out that it has been a very tough year for retirement savings, the chief executive noted that the company plans to make its "usual discretionary contribution to the 401k plan for 2008 (paid in March 2009).

"As we informed everyone last week we will continue to absorb the same percentage of costs for our medical benefit plans," the CEO said.

Recently, the chief executive of British daily Financial Times John Ridding in an internal memo had said that there would be no salary hikes in the near term, in addition to introducing voluntary redundancy programmes.

Further, the newspaper would offer voluntary reduction in working days to its employees and also tighten the recruitment process.

Moreover, travel and entertainment would be limited to essential 'revenue-generating or editorial trips and meetings'.

In the internal memo, Ridding said the firm would be increasing the yearly base salary next year only for those earning less than $50,000 while for others, the 2009 pay would be the same as in 2008.

Reports suggest that the number of people employed in media houses in the US and the UK, which stands at about 10 lakh, is expected to come down by half in the next few years.

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