Ma Bell Delays Merit Pay Hikes, Hiring

January 17, 2003 ( - AT&T Corp. has put off managers' merit pay hikes and has instituted a management-hiring freeze because of the economy and telecommunications industry problems.

The roughly 30,000 employees of the long-distance carrier eligible for merit raises will get them in September instead of March, the company said, according to a Wall Street Journal report.

However, managers will get their bonuses on time in March, Chairman and Chief Executive David Dorman told employees in a memo on Thursday that outlined the changes. Dorman said the delay was a less drastic way to cut costs than canceling the pay hikes or forcing employees to take days off without pay.

Industry Woes

Like other telecommunications companies, AT&T also has been struggling with shrinking revenue and increased competition. Its customers are increasingly using cell phones and e-mail for long-distance communication and it faces powerful new rivals as the regional Bells win regulatory permission to offer their local customers long-distance service. Staying afloat in these conditions requires tight cost controls.

AT&T has announced plans to cut about 3,500 jobs this year.