More than 400 senior managers within the United Kingdom's BBC, which employs around 28,500 people, have been told that they face a real-terms pay cut as bonuses and pay rises are scrapped this financial year.
Tuesday's announcement said that bonuses will not now be paid and pay rates will stay fixed until 2010. The BBC's executive management board, including Director-General Mark Thompson, his deputy Mark Byford and the Director of BBC Vision Jana Bennett did not take their bonuses for 2009 and have already had their pay frozen. Senior staff will have their bonus plan abandoned whilst junior staff have been told to expect any pay increases to be modest.
The BBC is under budget constraints after receiving a licence fee settlement below the amount management felt it required. Coupled with the effects of the credit crunch, the BBC is believed to need to find £1.7bn in savings between now and 2013 but has seen a further £450m shortfall develop. Initial plans to sell important BBC buildings have been put on hold since the falls in the property market in 2008. The planned pay freeze could save £20 million but risks angering unions who are seeking a general increase of £1,800 per person. Gerry Morrissey of BECTU, the broadcasting union, has already mentioned the possibility of industrial action. He told Sky News, "We have never been in favour of bonuses being paid so believe this should happen every year, and the money go towards eradicating low pay."
The Press Association quotes Mark Thompson as telling staff "A strategic contingency exercise, led by a senior group of managers, has been looking at what additional funds are needed should we need to put aside additional funds to cover our current estimate of the financial risks we face... We need to be in as strong a position as possible if we are to deliver distinctive content and meet our key strategic projects, such as moving to the new Broadcasting House, moving network production to the nations and funding our broadband future."
The pay freeze will not affect the Corporation's highest paid on-air talent, who are on individual contracts.

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BBC announces pay freeze and no bonuses for managers