METRO social and employment standards to be maintained in transferred companies

METRO AG, the German retail group, is selling off 250 companies as part of a reorganisation plan. In February 1999, following talks with trade unions and works councils, the management boards of METRO and DIVACO - the firm which is managing the disposal of the companies - reinforced and fleshed out a previous statement on the continuation of the METRO group's employment and social standards at DIVACO.

In November 1998, the METRO AG retail concern, based in Cologne, which in 1997 employed more than 134,000 people worldwide, announced the transfer of 250 companies with 2,000 locations and 34,000 employees to DIVACO, based in Frankfurt. METRO is implementing a reorganisation plan whereby it will focus on its core activities, and DIVACO is a so-called Verwertungsgesellschaft, a company whose purpose is to sell off METRO's non-core companies as quickly and profitably as possible. It is a joint venture involving METRO and investors led by Deutsche Bank.

After the announcement, the commerce, banking and insurance workers' union (Gewerkschaft Handel, Banken und Versicherungen, HBV) demanded that establishments should be sold only if the buyer was willing to provide for job security and maintain its operational locations in the long run. If closure was unavoidable, METRO should take on all the employees. Only if METRO's "internal labour office" placement service were unable to find new jobs for the people concerned, and this was approved by the works councils, should a METRO/DIVACO employment agency (Beschäftigungsgesellschaft) be used as a last resort. Furthermore, current collectively agreed employment conditions should be maintained and effective co-determination structures kept or improved. Talks between METRO AG, DIVACO, its works councils and the trade unions started on 14 January 1999.

On 12 February, DIVACO spelled out the social and employment standards it will apply in the former METRO operations:

• the collectively agreed employment conditions in place prior to the divestment will be retained;

• the redundancy plan standards applied at the METRO AG group will also be used at DIVACO;

• employees of DIVACO locations scheduled for closure will be included in METRO AG's placement scheme - the "internal labour office";

• as far as possible, employees of companies being sold will be retained by the new owners; and

• communication with employee representatives concerning completed and current sale efforts will be improved further.

These details were discussed with and approved by the employee representatives including the German White-Collar Workers' Union (Deutsche Angestelltengewerkschaft, DAG) and HBV. The provisions reinforce and flesh out a statement originally released when the non-core companies of METRO AG were transferred to DIVACO in November 1998.

According to information provided by HBV, the sale of the companies/establishments will be accompanied by a consultation committee consisting of employee and trade union representatives from METRO AG and DIVACO, which will discuss alternative uses if there is no potential buyer for an establishment. HBV assessed the outcome of the talks as acceptable. Nevertheless, the unions achieved neither a legally binding agreement nor job or employment guarantees. The management boards of METRO AG and DIVACO stated that they are convinced that this statement has created the basis for an economically successful sale of the companies transferred to DIVACO, while at the same time protecting employee interests.