Portugal proceeds with privatisation of Portugal Telecom SA

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Portugal Telecom SA, the country's largest telecommunications enterprise, is yet another Portuguese public company to go private, thus leading to a restructuring of its human resources. The latest stage of privatisation took place in October 1997. This feature is an overview of events and the positions of the various organisations that represent the workers involved.

Portugal Telecom SA (PT), is one of the country's largest businesses. It employs more than 20,000 workers and was established in June 1994 as a result of the merger of three telecommunications companies: Telecom Portugal, Telefones de Lisboa e Porto (TLP) and Teledifusão Portuguesa (TDP). The enterprise's capital was floated the following year.

Following adoption of Privatisation Decree-Law No. 226-A/97 of 29 August 1997, the third stage of the partial privatisation of PT's share capital began in October 1997, with the resulting net receipts reverting indirectly to the state.

The objectives of the privatisation of PT are defined in the Framework Law on Privatisation (Article 3, Law 11/90 of 5 April 1990). A limited number of shares have been reserved for purchase by the company's employees. The state has kept 25% of PT's share capital for itself, thus maintaining a significant influence over the enterprise in which it functions, through the Government, as a regulatory force in the telecommunications sector. By the same token, the state is to be paid an annual income under the terms of the privatisation agreement and certain telecommunications services are provided free of charge to a number of entities.

Views of worker representatives

The change in PT's statutes has created a new framework that has been arousing protests amongst the company's workers and their representatives. It has been alleged that the ongoing privatisation of the enterprise and the loss of the state as the major shareholder is sure to lead to dismissals and curtailment of workers' rights and benefits.

Several protests against the restructuring of PT have been carried out by PT's workers' commission. These protests have been backed by the sector's unions: the National Union of Telecommunications and Audio-Visual Media Workers (Sindicato Nacional dos Trabalhadores das Telecomunicações e Audiovisuais, SINTTAV); the Union of the Workers of Portugal Telecom and Enterprises in which PT holds shares (Sindicato dos Trabalhadores da Portugal Telecom e Empresas Participadas, STPT); the National Union of Postal and Telecommunications Workers (Sindicato Nacional dos Trabalhadores e das Telecomunicações, SNTCT); Union of Telecommunications and Audio-visual Media Workers (Sindicato dos Trabalhadores de Telecomunicações e Comunicação Audiovisual, STT); Portuguese Communications Union (Sindicato das Comunicações de Portugal, SICOMP); Union of Design Managers and Technicians (Sindicato dos Quadros e Técnicos de Desenho, SQTD); National Federation of Transportation, Communications and Public Works (Federação Nacional dos Transportes, Comunicações e Obras Públicas, FENTCOP); and the National Union of Graduate Employees (Sindicato Nacional dos Quadros Licenciados, SNAQ). Protest actions have included demonstrations, meetings and marches in front of the Lisbon stock exchange (Bolsa de Valores de Lisboa), appeals to higher authorities and several statements to the press and public.

Workers' representatives have in particular opposed measures to reduce jobs in the fixed net telephone service, a move that PT has been implementing through a programme of voluntary redundancy and early retirement. A net reduction of 2,000 workers in the fixed-net service is expected for the three-year period 1997-9. On the other hand, the administration has plans to increase worker output. The goal is to establish a predetermined ratio of 3.5 persons, instead of the current 4.5 persons, per 1,000 telephone lines. Despite this reduction and the rapid growth of the enterprise, the administration aims to heighten productivity through training and redistribution of labour.

Worker representatives are demanding compliance with Decree-Law 122/94 of May 14 1994. This law guarantees workers all rights and obligations that were theirs when the merger took place. It also requires the enterprise to take all necessary steps to harmonise labour conditions. The company-level agreement that has been in force since August 1996, covering all of PT's workers, now provides for retraining of personnel who have carried out traditional functions. These workers are to be redeployed in new areas and some will benefit from occupational regrading, a point which has led to some conflict. Electrotechnicians and workers in related areas have felt that they are being viewed as unqualified and systematically penalised by the regrading system that the new company-level agreement has imposed. Under the terms of the 1990 agreement, the enterprise had classified certain workers on a lower scale with lower wages than they felt entitled to. Under the terms of the new agreement, PT has agreed to reclassify and compensate those workers.

Given the enterprise's actions, and the repercussions that they have had on working conditions, the worker representatives are battling to safeguard employees' rights and have presented a series of conditions that they wish to see carried out:

• bargaining for new modes of career structuring that will ensure rapid career advancement;

• elimination of career imbalances;

• reduction of the working week to 35 hours;

• bolstering the pension fund in order to guarantee the future of retired workers;

• efficient management of supplementary retirement programmes;

• extension of supplementary retirement programmes to all workers recruited after May 1992;

• compliance with the health insurance protocol negotiated with the Ministry of Health regarding timely payment of amounts agreed by both parties;

• creation of new jobs with preference given to the children of current and previous employees;

• cessation of "outsourcing", which is seen to eliminate jobs, cause job insecurity, relieve the enterprise of its social obligations, hamper the quality of service and damage the company's image;

• quality training on a sufficient scale that will meet the challenges of new technology and customer needs;

• implementation of suitable commercial and technical policies to ensure the maintenance and creation of jobs and the enterprise's competitiveness;

• harmonisation of benefits (such as health insurance coverage) for all employees in the PT group by through the creation of a single company-level agreement; and

• improvement of customer service.

Commentary

The reduction in employees, the need to increase productivity and the prospect of new employee training and regrading policies are a result of the liberalisation of PT and indicate the need for increased company competitiveness. As is the case with most nationalised enterprises, the unions affiliated to the General Confederation of Portuguese Workers (Confederação Geral dos Trabalhadores Portugueses, CGTP) tend to view privatisation unfavourably as a move which reduces union rights.

There has been no joint strategy pursued by the worker representatives to purchase shares to increase the employee power base, nor have the workers' commission and main unions in the sector come up with any other strategy to gather together PT shares purchased by employees. Thus, the collective amount of share capital is not sufficient to allow for representation on the board of directors, even though the number of board members has risen from seven to 19 as a result of changes in PT's statutes. Without a single representative on the board, it has been claimed that the enterprise's employees will lack any decision-making power.

As far as the Government is concerned, the restructuring of the telecommunications sector resulting from the privatisation of PT is an important move, not only to ensure the company's competitiveness but also to bolster Portuguese society and the country's economy. Along the same lines, the total liberalisation of the telecommunications sector in Portugal has been projected for 2000. (Ana Carla Casinhas, UAL)