Commentary: Generous savings at BT

Shareholders in BT might agree with Peter Archer, the director of employee relations, when he said the company's redundancy pay-offs were too generous. Some 16,000 more people volunteered for redundancy than were needed.

But this may say as much about working for BT as about the size of the package. For many BT employees, the past few years have been extremely unpleasant, with the company under intermittent fire from regulators, politicians and the public alike. The return fire from BT's bosses has been unimpressive.

The workforce has fallen from 240,000 on privatisation to about 210,000 now. Further cuts are planned, taking numbers employed down to about 135,000 by 1995.

Employees could see that if they did not volunteer now on attractive terms - three times salary - they would be volunteered sooner or later - probably on less generous terms.

BT employees may be too optimistic about their ability to find other work. With three years' money in the bank they believe they can afford to wait. Engineers and technicians are still in demand, but directory inquiry operators and others will find it hard to get another job. Many of their former colleagues who were made redundant in earlier programmes are still looking for jobs, long after their redundancy money ran out.

The company and its shareholders have little to regret. The company stands to make huge savings from its pounds 1bn redundancy programme, allowing it to keep increasing its dividend despite regulatory pressure on prices.