Telekom Austria employees oppose job reduction plans

Financial difficulties have prompted Telekom Austria’s management to call for workforce reductions which would affect up to 2,500 of the company’s public service employees. The company plans to transfer these employees to a special ‘employee pool’, from which they could be hired out to other private sector companies. However, the Union of Post and Telecommunications Employees and staff representatives are strongly opposed to these plans.

Background

Telecommunications services were, along with postal services, long organised as a state monopoly in Austria. In 1996, this monopoly – namely, the state-owned Austrian Postal Authorities (Österreichische Post- und Telegraphenverwaltung, ÖPTV) – was transformed into an enterprise based on private company law, Post und Telekom Austria AG (PTA) (AT0203202F). Since then, new employees have been recruited exclusively as employees under private law; however, all of the public employees of the former authority were transferred to PTA.

In 1999, telecommunications were separated from PTA and subsequently partially privatised as Telekom Austria AG (TA) (AT0601205F). The reorganisation of the sector was accompanied by the liberalisation of the markets since 1997, when the telecommunications market was opened to private competitors. As a result, the telecommunications sector changed significantly, with several joint venture companies acquiring a licence from the authorities for the expanding mobile telecommunications network.

Economic situation

Since the sector’s full liberalisation, TA has faced a series of problems, among which the following appear to be the most important:

• fierce competition in the mobile phone business segment – that is, TA’s Mobilkom branch – which has been expanding continuously since it was launched;

• constantly declining numbers of fixed-network telephony users despite large investments in this branch of activity. As a result, this business segment has been running at a loss for years;

• the heritage of a large number of public employees, who still account for almost 40% of the company’s workforce.

Restructuring programme

Against this background, in early May 2008, TA’s CEO, Boris Nemsic, in conjunction with the state public holding company (Österreichische Industrieholding AG, ÖIAG), proposed significant workforce reductions. To date, ÖIAG still holds 27.37% of shares in TA. According to the proposal, between 2,100 and 2,500 of the company’s currently about 17,700 employees – mostly public service employees who cannot be laid off – should be transferred into a special ‘employment agency’ or ‘employee pool’ under the umbrella of ÖIAG. The plan is that ÖIAG should be entitled to hire out these employees to private sector companies, with the public employees retaining their special civil service employment status. However, since public employees in Austria enjoy high protection against displacement, the lawfulness of these plans is contested.

Trade union protests

The Union of Post and Telecommunications Employees (Gewerkschaft der Post- und Fernmeldebediensteten, GPF) together with the company’s staff representation has strongly opposed these job reduction plans. They believe that the ‘employee pool’ as designed by TA’s management is a ‘parking agency for alleged surplus public employees’. Furthermore, they question the existence of staff overcapacities, since the TA group currently employs some 1,200 temporary agency workers. The central staff council, which is the highest hierarchical level in the staff representation system, argued that TA’s management should consider further business expansion with regard to new areas of activity instead of making employees redundant.

In addition, GPF proposed the ‘re-nationalisation’ of the fixed-network segment of the company, by selling all of its shares to ÖIAG. Such a process would yield at least €2.2 billion for the benefit of the Mobilkom branch, which would remain within the TA group. However, given the current predominance of a neoliberal policy line among most of the political parties, a re-nationalisation programme is unrealistic. In order to inform the company’s workforce and to demonstrate its willingness to take industrial action if necessary, GPF organised some works meetings in early June 2008.

Commentary

In a short-term prospect, the establishment of an ‘employee pool’ as envisaged by TA’s management remains unlikely. This is mainly due to the fact that the concept of such an agency or pool has not been sufficiently elaborated thus far. Moreover, the Social Democratic Party (Sozialdemokratische Partei Österreichs, SPÖ), the senior partner of the current coalition government with the conservative People’s Party (Österreichische Volkspartei, ÖVP), has largely adopted the trade union’s disapproving position.

Nonetheless, with the government having resigned in July 2008 because of internal conflicts and general elections scheduled for September 2008, a new government configuration may take up TA’s restructuring plans again. The President of the Federation of Austrian Industry (Industriellenvereinigung, IV), Veit Sorger, issued a possible compromise solution in late June 2008. According to Mr Sorger’s proposal, public employees should be transferred to the planned employee pool only on a voluntary basis, with particular incentives provided – such as income securities, the right to resume their previous job and certain claims for further training.

Georg Adam, Department of Industrial Sociology, University of Vienna