Today we learn that it cost BCE a one time payment $230 million to fire 2,500 of its employees, and save $300 million a year, in perpetuity.
This move was mandated by BCE’s new owners, Ontario Teachers’ Pension Plan. It seems that teachers’ pensions are more important than workers’ jobs. Spending $230 million in severance to save $300 million year in wages, means that the average severance package for these former BCE employees was 9 months’ pay. That’s not a lot of money for a person who has a mortgage to pay and needs to find a new job in a slowing economy, This leverage buyout of BCE was personally approved by Jim Prentice as Industry Minister and arose solely because of the actions of Jim Flaherty as Finance Minister and the Stephen Harper Conservatives. So too these 2,500 layoffs which are endemic to private equity leveraged buyouts, or don't these guys know that?
So how did BCE select these 2,500 workers to satisfy the voracious return on investment requirements of Ontario Teachers’?
Did Ontario Teachers’ do the humane thing and offer BCE’s entire workforce a buyout package, such that those who left we the ones who wanted to leave? No, as that would have cost more than 9 months average severance. More like one year or more in severance. Obviously, this firing exercise was motivated by getting the biggest bang for the buck. That would have meant firing the newest recruits first, since their severance payments would be the least, and yet the cost savings would be roughly the same, as opposed to firing the more long standing employees.
Therefore the answer to this question is:
LIFO: Last In, First Out, as opposed to
FIFO: First In, First Out.
Thursday, August 7, 2008
Posted by Fillibluster at 8:24 AM