Piggies in the trough

Over the last two days I have examined some of the discrepancies between the higher paid elite in the welfare to work sector and the average frontline staff member. In this analysis I have been highly critical of some of the attitudes of these companies. Organisations that profit from government money that we originally gave through our taxes.

Indeed, there is a rather ludicrous cycle that occurs amongst those working in the sector where staff pay the taxes that pay for the contracts that give the providers the profits that give the directors the huge salaries, whilst either keeping them on very low incomes, or force them into redundancy. Now don’t get me wrong, I am not against anyone, individual or company, getting ahead and I am enough of a realist to recognise how companies need to make profits in order to survive.

Where I have a problem is when companies make substantial profits, pretend they are making losses and don’t pass on any of their gains onto the workforce. Without doubt, this argument can be thrown at the welfare to work sector.

Let’s take a few examples of some of the bigger companies:

A4e:
Annual turnover: £190,990,000.00
Annual profit: £9,877,000.00
Turnover per employee: £58,693.92
Profit per employee: £3,035.34

EAGA
Annual turnover: £762,179,000.00
Annual profit: £41,471,000.00
Turnover per employee: £162,719.68
Profit per employee: £8,853.76

PeopleServe
Annual turnover: £9,252,000.00
Annual profit: £1,672,000.00
Turnover per employee: £36,860.56
Profit per employee: £6,661.35

Working Links
Annual turnover: £85,737,000.00
Annual profit: £1,353,000.00
Turnover per employee: £66,617.72
Profit per employee: £1,051.2

Reed in Partnership
Annual turnover: £57,460,000.00
Annual profit: £-237,000.00
Turnover per employee: £82,439.02
Profit per employee: £-340.03
(Before you feel sorry for them, this year was far from typical and normally they make large profits)

Remploy
Annual turnover: £267,951,000.00
Annual profit: £9,543,000.00
Turnover per employee: £52,611.62
Profit per employee: £1,873.75

Shaw Trust
Annual profit: £5,424,000.00
Profit per employee: £2,125.39

Seetec
Founded in 1984, Seetec, based in Essex, has become one of the largest and most experienced providers of government-funded welfare to work and skills-training programmes. The company employs more than 500 people across a national network of 50 employment and training centres, and works with thousands of people each year to find work or gain qualifications through a diverse portfolio of employability or skills contracts. Last year, Seetec pulled in £21.2m in sales and profits of £2.112m. This enabled the company, which is 56 per cent owned by founder Peter Cooper, to pay total dividends of £990,608.

JHP
Founded in 1983, it operates a national network of 117 centres and also delivers training in employees’ workplaces. Under chief executive, Jim Chambers, profits grew 52% a year, from £4.4m in 2008 to £10.2m in 2010

Maximus
Its profits in the first nine months of 2010 shot up by 19.4 percent—to £131 million. And its top boss, Richard A Montoni, grabbed a pay package worth £2 million last year.
• CEO Richard A Montoni sold 10,000 shares of MMS stock on 07/15/2010 at the average price of £59.44
• CEO Richard A Montoni sold 5,233 shares of MMS stock on 08/11/2010 at the average price of $58.59.
• CEO Richard A Montoni sold 4,767 shares of MMS stock on 08/17/2010 at the average price of $58.06
• CEO Richard A Montoni sells 10,000 shares of MMS on 09/20/2010 at an average price of $58 a share.

As a result of these transactions, Montoni earned in excess of £4m over a 3-month period. Nice for some!

It is clear many companies in the sector are making huge profits from welfare to work contracts. Their justification for discarding hundreds of people now is obscene as many of them could have been redeployed in a couple of months under the new Work Programme. The only reason companies like A4e have chosen to make their NDDP and pathways to Work staff redundant is because they are too tight to pay a couple of months salary and see if these people could be reintegrated into the company under new contracts. They chose not to do this, favouring the ‘cheaper’ route of saving a few quid from not having to pay a couple of month’s salary.

It is an absolute disgrace and it will come back to bite them.

Staff working in the sector desperately need to unionise and protect their interests. They can no longer rely on the artificial bonhomie offered by senior management – as 1,500 staff now on redundancy notice can testify. If workers join trade unions they can be protected when the results of the Work Programme are announced. Some of these staff are likely to find themselves joining their colleagues on redundancy notice. They should not assume their employer will look after them – they will not – as many can confirm.

I call upon workers in the sector – join the trade unions. Mobilise to protect your jobs before it is too late.