Pan Mac announces pay reductions and distribution staff furloughed as sales drop over Covid-19

Higher paid staff at Pan Macmillan have been asked to volunteer for a pay reduction and employees at its distribution arm will be furloughed as the publisher unveiled measures to help “safeguard” its business during the Covid-19 pandemic.

Staff were informed at Pan Macmillan, Priddy and Macmillan Distribution that MPIL needed to take decisive action to cope with what is likely to be a severe loss in sales from the coronavirus crisis, which has seen physical bookshops closed around the UK.

In a note to staff at Pan Macmillan, Anthony Forbes Watson warned sales would be “particularly hard hit” and it was time to act “speedily and decisively”. Forbes Watson said the action taken so far ‚Äì cutting capital expenditure, travel and non-essential spending, plus freezing all vacancies and suspending this year's pay review ‚Äì would "not alone be adequate to the size of the challenge we face around the world over the coming months”.

Forbes Watson, who will take a 50% pay cut, said colleagues were being asked to volunteer for a three-month pay reduction, structured to hit those who are paid the most. Similar policies were being announced at the firm's sister companies around the world, he said.

The proposed voluntary reductions do not affect any employees on lower salaries and are modelled on a salary band basis, for all on salaries over £32,000. A spokesman for the firm said if people did not volunteer their decisions would be respected.

Forbes Watson said: “This is a group challenge, and around the world our sister companies will take broadly the same approach, tailored to the particular conditions prevailing in each country. For us, the savings that will be generated over the next three months from this and our other cost saving initiatives, will be critically important to safeguarding our business, and to protecting Pan Mac jobs.”

At the same time and over the same period, Pan Macmillan will offer reduced hours to everyone. All those working full time will not be required to work Friday afternoons and anyone working part time can agree a different half day of leave during the week.

Similar communications were sent out at Priddy Books and also by Guy Browning at MDL, where a number of staff are being placed on furlough. The publisher is using the government's furlough scheme, which pays employees 80% of their wages, with MDL making up the rest.

Forbes Watson told staff: “At Pan Mac we have built an enviable record of setting and hitting ambitious targets over the last decade, of which we are justly proud, but we are now confronting an entirely new problem, and we must find a new way to come through it. I put this recommendation to you in the knowledge that the present situation demands it. I know you understand this is a hard message to give, and that these decisions have been hard to make; I thank you as ever for your support and your enduring commitment to our business.”

The publisher has been putting out regular updates on how its business has been going, with the latest earlier this week saying supermarket sales were strong and there appeared to be greenshoots in China and other parts of Asia. However, a spokesperson for the firm said the impact on its sales globally was likely to be “severe” over the next three months.

Staff have also now reviewed all their April and May releases, moving some to later in the year but keeping others as they are. Authors and agents are currently being informed of the changes.

Anthony Forbes Watson's statement in full:

We have a policy of openness at Pan Mac and through this crisis we will continue to practise it: this note is to tell you about the steps we're taking to protect our business, both here in the UK and around the group.

We expect sales to be particularly hard hit and we must respond speedily and decisively: we have already cut all capital expenditure, travel and entertainment spending and any non-essential spending of any kind beyond the acquiring, making and packaging, communication and distribution of our books. We have decided too, to freeze all vacancies, and to suspend our 2020 pay review indefinitely. While these are wide-ranging steps, we have reluctantly concluded that they won't alone be adequate to the size of the challenge we face around the world over the coming months.

We will therefore ask our colleagues everywhere to accept a three-month reduction in pay to meet this challenge. Here we will launch a voluntary pay reduction programme, progressively structured to fall in the main on those who are paid the most and who can best weather such a reduction. I will personally accept a straight 50% reduction on my salary. This is a group challenge, and around the world our sister companies will take broadly the same approach, tailored to the particular conditions prevailing in each country. For us, the savings that will be generated over the next three months from this and our other cost saving initiatives, will be critically important to safeguarding our business, and to protecting Pan Mac jobs.

At Pan Mac we have built an enviable record of setting and hitting ambitious targets over the last decade, of which we are justly proud, but we are now confronting an entirely new problem, and we must find a new way to come through it. I put this recommendation to you in the knowledge that the present situation demands it. I know you understand this is a hard message to give, and that these decisions have been hard to make; I thank you as ever for your support and your enduring commitment to our business.