One of Canada's largest newspaper conglomerates will lay off about 40 employees after a number of its unions would not approve a temporary salary reduction to help reduce costs amid the COVID-19 pandemic, according to a memo sent to staff.
"Given the scale of the crisis, and the unprecedented level of revenue declines, it was very important to me that the burden of cost containment be shared fairly across the company," reads the memo from Postmedia CEO Andrew MacLeod, which was shared on social media.
"As such, we are necessarily moving forward with approximately 40 permanent reductions in accordance with the terms of our collective agreements."
Postmedia's vice-president of communications, Phyllise Gelfand, confirmed the figure in an email.
The memo explains that measures such as temporary salary reductions that are not expressly contained in collective agreements for its unionized operations must be negotiated between union leaders and management. Union leaders then take select options to their members who may vote on management proposals.
Postmedia has 43 collective agreements across the company, according to the memo.
"Unfortunately our request for a temporary salary reduction was not supported by the unions and we were unable to find mutually agreeable common ground on alternative cost reduction measures," the memo reads.
Postmedia asked the union to approve a five-per-cent wage reduction for all staff, said Martin O'Hanlon, president of CWA Canada, which represents a couple of hundred Postmedia employees across Canada.
At the end of April, the company announced company-wide pay cuts in addition to about 80 layoffs and the closure of 15 community publications. Staff who earn $60,000 or more, excepting commissioned ad sales representatives, would receive a salary reduction for at least three months to be re-evaulated later. Executive vice-presidents, senior vice-presidents, directors, managers and supervisors would see their pay cut by eight to 20 per cent, while remaining staff would experience a five per cent drop with no one falling below the $60,000 annual salary mark.
The company needed union approval for employees covered by collective agreements.
The proposed pay cut would have saved the company about $100,000, O'Hanlon said. The union declined to agree to it, but offered to purchase $100,000 in advertisements instead — an offer he said was ignored.
"The executives, the debt holders are not going to be out a penny when this is all said and done with so why the hell would the people who put out the product, why should they bear all the burden. That's our point."
Ten positions represented by O'Hanlon's union are on the chopping block, but he said the union is still negotiating to bring that figure down. That includes allowing employees to accept voluntary buyouts.
"The number of layoffs does not actually mean there'll be that many layoffs. We'll negotiate, we'll get a deal, and we hope the company will listen to cost-cutting alternatives."
Eleven positions represented by Unifor Local 87-M, which represents hundreds of Postmedia employees, are also set to be eliminated in this round of layoffs, said president Paul Morse.
His union also rejected the pay cut, he said, adding there were no guarantees that layoffs wouldn't happen as well.
The union is also going through the process of allowing employees to voluntarily leave in an effort to reduce the number of layoffs, he said. He expects the process to wrap up in the next week or so.
"Obviously, we hope this will result in most, if not all, of the layoffs being rescinded."
In May, Postmedia reported a nearly eight per cent drop in revenue for its second quarter, which ended Feb. 29. That included a $9.9 million decrease from print advertising and $2 million of print circulation revenue.
At the time, the company said it expects to qualify for at least $20.3 million in emergency wage subsidies from the federal government during the coronavirus pandemic. The memo confirms Postmedia qualified for government subsidies as its revenues fell more than 30 per cent, "and the subsidies, while welcome, don't come close to mitigating these declines."
This report by The Canadian Press was first published May 27, 2020.
Companies in this story: (TSX:PNC.A, TSX:PNC.B)
Aleksandra Sagan, The Canadian Press