staff reductions

Struggling childcare group ABC Learning is planning to slash its part-time workforce by 1000 or more in an effort to save up to $26 million each year and stem losses that threaten the company's future.

Alongside its 16,000 permanent employees, Australia's biggest childcare company employs up to 1600 part-time staff through agencies, but is reworking the rosters and redeploying staff as part of the overhaul of its Australian and New Zealand operations by chief executive Eddy Groves.

The cuts come as ABC's shares continue to be suspended from trading. The company is awaiting sign-off from its new audit firm Ernst & Young, which is in the process of restating the company's accounts.

Last year, ABC swapped Brisbane-based incumbent auditor Pitcher Partners for the global top-three firm whose Australian chairman Brian Long is regarded as the "auditor's auditor".

On July 31, ABC forecast that it would post a pre-tax loss of $437 million for 2008.

This was going to include write-downs of $213 million, but the group, which has $3 billion of goodwill on its books, is now expected to take a larger hit.

"Our staff are all pretty much on the MBA (multiple business agreement) -- we are the only childcare group to have an agreement with the unions on a national basis and that's it," Mr Groves told The Australian.

"Where we have been inefficient in recent years, which is the reason why the profit was down, is the use of agency staff.

"The problem is that the use of agency staff, which is probably about 8-10 per cent of our staffing, is bad in a number of ways.

"It costs us double the amount of money and you don't get consistency of care for a child because they don't see the same carer."

Mr Groves said the company was looking at the staff to child ratio for each centre, and moving staff between centres.

These ratios are now the subject of government attention from the Parliamentary Secretary for Early Childhood Education and Child Care, Maxine McKew.

This week she attacked the standard ratio of one staff member for five toddlers as "not best practice".

Mr Groves said the majority of ABC permanent staff were on close to 38 hours.

Under the union agreement, ABC must have over 35 per cent of its staff on the full 38-hour week, but Mr Groves would not say how many more were on the full allocation.

Under the agreement, anyone employed for less than 38 hours can have their hours varied by 30 per cent.

People close to the company said ABC employed thousands of staff on 37.5 hours. ABC has seen its share price collapse over the past 12 months from above $7 to 54c now, hit hard by the global credit crunch, after it borrowed too much money to pay for expensive local and offshore acquisitions.

A major restructure is now under way. This includes selling off part of its US business and the review of its local operations.