Penguin's Makinson explains pay freeze
05.12.08 Philip Jones in The Bookseller

Penguin Group chairman and chief executive John Makinson has explained the decision to freeze the pay of employees earning more than £30,000 a year.

As first reported on The Bookseller yesterday (4th December), Pearson has issued a group-wide edict, which includes Penguin and Pearson Education, not to raise 2009 salaries in an attempt to stave off more serious problems arising from the economic downturn.

In a statement, Makinson said: "We should expect, and plan for, the unexpected in 2009 and possibly beyond. We have thought long and hard over the past few weeks about just how we should do this. We have tried to keep two important principles firmly in mind: first, we should act decisively and pre-emptively to reduce our costs so that we can continue to invest in our company in spite of the challenging circumstances; second, we must do everything we can to try and keep our people in jobs. The measures we are announcing today are being applied across the whole of Pearson."

In the memo to staff, quoted on Publishers Weekly, Makinson added: "This is the most challenging economic environment that any of us has ever experienced."

He said he was hopeful that holding off on pay increases for the next year would help Penguin avoid those drastic measures.

But he added: "I cannot of course guarantee that there will be no job losses in Penguin in 2009. In this financial climate that would be plain foolhardy."

Penguin will not be hiring "unless it is absolutely essential."