THE “DISNEY” COMPANY LEFT 100,000 EMPLOYEES WITHOUT SALARIES

The world of entertainment is rapidly becoming empty due to the spread of COVID-19. It affected the enterprises of the industry leaders - Disney parks as well. As a result, the company's management made an unpopular decision to save money from the wage fund of those employees who were involved in servicing the entertainment complexes. Since mid-April, more than 100 thousand employees have been sent on the forced unpaid leave.

According to several American periodicals, such a step of “Disney” will allow the brand to get significant financial savings of about $ 500 million in one month. The act of the American company is not, since other large companies have previously reported about similar decisions.

For example, the management of the Hong Kong-based airline “Cathay Pacific” turned to its staff (more than 27,000 people) in February, asking them to go on vacation for three weeks, due to the financial problems of the company. The same decision was made in April by the British “Guardian Media Group” company, which decided to send about 100 thousand workers who are not involved in the journalistic activities on the forced unpaid leave.

Such cost reductions, according to the experts, could hurt Disney's professional and business reputation, and affect the government support of the company subsequently.

The fact is that Disney is one of the largest recipients of funds from the US budget. Earlier, according to the information from the business media, the corporation received additional loans and currently has about $ 20 billion.

Moreover, sending ordinary employees on the unpaid leave, Disney continues to provide incentive payments to top managers who previously refused from the salaries. Given that it is incentive payments, but not salaries, that are the main income of Disney executives (about 70-80%), it becomes clear that such a decision can cause a negative reaction of the employees.

To the credit of Walt Disney Co, it is worth noting that the company decided not to cut back on medical care for the employees on such leaves.

Since April 19, the first wave of employees went on the leave - the company’s press service recommended that they apply for additional unemployment benefits, caused by the downtime of the parks, hotels and attractions. But here, it is necessary to note that 70 thousand out of the 100 thousand employees live in Orlando, where the unemployment benefits are one of the lowest in the United States ($ 275 weekly). The employees of the Disneyland in Paris were more fortunate as the French authorities promised to compensate up to 84% of their previous salaries.

So far, no one can say, what financial losses Disney will suffer from during the coronavirus pandemic. It all depends on the period of time for which the further work of the entertainment industry will be suspended.

For the moment, the shares of the company have already fallen by 25%.

If the last year the Disney Corporation received about $ 7 billion in operating profit (almost half of the total profit) from theme parks and related services, this year the company expects losses, the amount of which is still estimated at $ 175 million. The final amount of losses will depend on the duration of the total downtime period.