Innovative restructuring agreement at Belgacom

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In December 2001, management and trade unions at the Belgian telecommunications operator Belgacom signed an agreement on the implementation of a new restructuring plan, affecting 3,000-4,000 employees. The agreement, which provides for a combination of retraining, working time reductions and voluntary redundancies, has been welcomed for its innovative measures.

On 7 December 2001, management and trade unions at the Belgian telecommunications operator Belgacom signed a draft agreement on the implementation of a new restructuring plan, affecting 3,000-4,000 employees. A new collective agreement ratified on 21 December will give concrete form to this plan during 2002. The new restructuring plan has been dubbed BeST ('Belgacom e-Business Strategic Transformation'). It is the second such plan to be implemented in the last few years, the previous one - dating from 1997 - being known as PTS (BE9704207N).

The unions say that if the anticipated effects of these two plans are put together, very nearly half the workforce at Belgacom – a limited-liability company governed by public law, with the state still one of the shareholders – will have lost their jobs in the space of six years. Belgacom currently employs about 19,000 people. The agreement concluded by management and unions was welcomed by Belgian observers, some of whom believe that it could be used as a 'social laboratory'.

The agreement on implementing the restructuring plan is in three parts:

1. for those employees 'whose current jobs no longer match planned developments and changes in the enterprise', the BeST plan provides an in-house training/retraining programme. The measure potentially affects 3,000 people, and will cost an estimated EUR 125 million. Belgacom says that opportunities for retraining will be examined on a case-by-case basis, and will depend on the aspirations and the skills portfolios of the people concerned;

2. all Belgacom staff will be given the opportunity to reduce their working hours to 80% or 50% of normal working time. Between 500 and 1,000 people might be interested in this formula. Pay cuts incurred as a result of this reduction in working time will be 'partly compensated for' by a monthly allowance borne by the state; and

3. all (statutory) members of staff aged at least 50 on 31 December 2002 with at least 20 years' seniority may leave their job on a strictly voluntary basis, 'but they may remain on the labour market if they so wish'. The agreement states that employees opting for this kind of voluntary departure will qualify for a monthly allowance of 75% of their final gross pay as determined by the salary scale (ie excluding bonuses, allowances and indemnities).

On the last point, the agreement is innovative by comparison with 'classic' early retirement agreements, in that Belgacom will offer incentives to encourage staff leaving the enterprise not to abandon the labour market: on the one hand, the firm will offer an 'incentive bonus' of EUR 8,676 to all employees who find a job after they leave Belgacom (the amount of the bonus will decline, based on the amount of time it takes to find a new job); on the other hand, the same employees will also receive an 'annual perseverance bonus' until retirement (this, too, will decline, depending on the period of inactivity). These bonuses will be wholly funded by Belgacom, and the company has also agreed to set up 'regional guidance units' to help staff find new employment.

The trade unions say that the BeST plan is likely to lead to 3,500-4,000 voluntary redundancies; management says that there will be 4,450 candidates. If that is correct, it will cost Belgacom a relatively low BEF 23 billion. The previous plan, the PST, cost BEF 25 billion and resulted in 6,200 people leaving the company on early retirement.