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Perilya can’t afford pay rise

Tuesday, 12th November, 2013

By Craig Brealey

Perilya has opened discussions with individual employees about its proposal to have them forego a four per cent pay rise.

The rise is due to them in January next year under the terms of the industrial agreement signed last year but on Thursday last week the company sent letters to each of its 450-odd employees asking them to not accept it. 

It could be the first time in the history of city’s mines that such a request has been made but, according to David Hume, the General Manager of Perilya Broken Hill, the mines were making a loss and something had to be done to cut costs. 

They had lost $24 million in the first half of the year, Mr Hume said, and the company was having to inject funds from its other operations to support Broken Hill.

Asking employees to drop the pay rise was “a reflection and a response to the financial position of the business,” Mr Hume said yesterday.

That position was due mainly to two long-running problems - low metals prices and the very high Australian dollar, he said. 

“Prices are simply not keeping pace with expenses.”

The cost-cutting started at the beginning of the year when a small number of underground workers were laid off, Mr Hume said. Some contractors were also let go and their jobs given to mine employees.

Perilya had also been hit by the slow start of the Potosi mine and expensive geotechnical problems, said Mr Hume.

He said that “many, many kilometres” of old workings in the former NBHC and Zinc mines and out to the Southern Cross mine at the southern-most end of the Line of Lode were having to be repaired due to wear and tear and there had been a number of falls of ground because the old supports had failed. 

“This has required remediation measures and we have had to divert resources from production to rehabilitation.

“The situation now is we are still operating at a cash loss and are focussed on identifying where we can reduce the loss and eventually turn it around.”

He said the CFMEU had been informed of the request to workers to relinquish their pay rise. 

“The union is party to the agreement and therefore has a role in negotiations to vary the agreement.

“Employees have been asked to nominate a representative to negotiate with the mine management and in the case of union members, this will be CFMEU.”

Mr Hume said negotiations will begin early in December and a vote called by the middle of the month.

However, the matter will still have to go Fair Work Australia for approval and ratification.

But it was not only the workers who were being asked to make the sacrifice, Mr Hume said.

“We have started face-to-face meetings with employees to clarify the process and also explained that this in not just being put on the workers but also on senior management and staff, even though they are not covered by the agreement.”

The Vice President of the CFMEU, Greg Braes, told the ABC that while the union was ready to negotiate on its members’ behalf, it was up each to decide to if they wanted to forego the pay rise.

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