Wage cut prompts online protest at IBM

IBM lowers the pay for a large chunk of workers, who voice their opposition online.

Labour protests in the high-tech industry are rare, but IBM is in midst of one -- and it's unfolding entirely online. Instead of waving protest signs outside the company gates, affected workers are airing, in comments accompanying an online petition, disappointment, anger and bitterness with the company over a salary cut affecting 6 per cent of IBM's US workforce.

Since its announcement last month, more than 1,200 people have signed a petition sponsored by the Alliance@IBM, protesting pay cuts to 7,600 technical support employees. Whether all these signatures are from affected employees is not certain, but many of the comments seem authentic, and often heartfelt.

Comments such as "11 years on call ... Now less money than when in started in 97," "Previous loyal employee ... No more," and "This is not fair. I did not deserve this after all my hard work," are typical.

This change in how technical support workers are paid stems from a federal class action lawsuit filed by some employees in early 2006. In it, the workers complained they were not getting paid overtime after a 40-hour work week and they sought back pay. IBM settled the case that same year for US$65 million.

Last month, IBM told workers that it was reclassifying technical services and IT specialist jobs to nonexempt positions, making them eligible for overtime. But the company said it was also making a 15 per cent base salary adjustment -- down.

Overtime pay, as a well as a transition payment to help where overtime doesn't meet the base pay adjustment, will offset this pay cut according to the company. The company characterized the change as a "pay remix" in a series of slides to managers that was subsequently leaked. But not all the employees will be able to offset the pay cut with overtime, according to information sent to managers; about one third of the affected employees are working on average less than 45 hours a week, the apparent salary parity threshold.

IBM spokesman Fred McNeese said that were IBM to pay overtime on top of salaries that were already competitive with the industry, the company would be uncompetitive. McNeese's point is listed as a key one in the slides sent to managers. "Adding overtime compensation to already competitive pay would quickly produce costs that exceed competitive levels -- an undesirable result for employees and our clients."

McNeese believes that overall compensation for employees after the change "should be the same."

Two affected employees, who spoke on the condition that their names not be used, disagreed that their pay would be similar. They argued that overtime was far from certain, required managerial approval, and opportunities for it could vary depending on business. Moreover, the cut in base pay affected those aspects of compensation calculated on base salary alone, such as insurance and disability. They also argued that it could affect personal areas, such as ability to qualify at a certain mortgage amount. One employee said that it rolls back his salary to what he earned in 2001.

The employees were also skeptical of the company's assertion that this change wasn't put in place to cut overall costs, and there are suspicions that wage pressure from offshore centers may be at work -- something IBM denies. "As far as I am concerned, they are going to save money," said one employee.

Lee Conrad, a former IBM employee who is now national coordinator of the Alliance@IBM said he believes globalization may be a factor in the pay cut decision and suspects other companies will be looking at how IBM manages the pay cut. "If IBM is an indication of what's ahead, it's going to be a rough ride for American workers," he said.

The union, which is part of the Communications Workers of America, represents about 6,000 of IBM's total US workforce of 125,000. It would need at least 60 per cent membership to have bargaining power with the company, said Conrad.

Conrad said he been impressed by the outspoken reaction of IBM employees. "For IBMers to sign their name publicly to a petition -- that says a lot," he said.

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