Costain makes 5% cut in staff pay

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The Independent Online
COSTAIN, the housebuilding and contracting group, is imposing a 5 per cent pay cut on its 2,900 British employees as part of a package of measures to save pounds 11m.

The cut, effective from April, will apply to everyone from Peter Costain, the chief executive, downwards. It is also shedding 150 jobs and pruning its travel and expenses budgets.

Costain has shed 17 per cent of its British workforce in the past year. Last October, it made 320 engineering and construction staff redundant, saving pounds 8m. It is expected to lose pounds 50m this year.

A spokesman said yesterday that business had continued to deteriorate since October 'and we need to continue to match costs with turnover'. He added that the savings 'give some comfort' to the group's lenders, although he denied that there had been any pressure from banks to cut costs.

He added that most employees, while 'not happy, are accepting' the cuts. But today's edition of Contract Journal claims that some staff may take action.

The group's net borrowings at the end of October were pounds 340.4m while analysts estimate that shareholders' funds will have fallen from pounds 314.6m to about pounds 210m by the end of the year.

Efforts to cut debt by selling its Australian mining business have been frustrated by legal action by Hanson, whose dollars 200m ( pounds 130m) bid was rejected in favour of a dollars 245m offer from Altus Finance. Hanson obtained an injunction preventing the deal going ahead and a further hearing is due to start in the US on 19 January.