Levi management reaches agreement with unions on closure of Belgian plants

In December 1998, a majority of workers at Levi Strauss in Belgium voted in favour of a social plan accompanying the closure of the company's three plants at Deurne, Wervik and Gits, as negotiated between the company management and union representatives. This enabled the closures to take place by the end of 1998.

In October 1998, the US-based jeans manufacturer Levi Strauss announced plans for the closure of its three plants at Deurne, Wervik and Gits (BE9810250F). On 11 December, it was announced that 77% of the workers concerned had voted in favour of a social plan accompanying the closure of the plants, negotiated between the company management and union representatives. This meant that the sites could be closed by 31 December 1998. The unions had undertaken some hard bargaining after the original announcement of the Levi closures, but after offering a number of alternatives, and following a failed takeover by another company, it became clear that the closures would be unavoidable. The unions have, however, ensured that a high price is attached to the closure of the Belgian Levi plants: the closures are costing Levi Strauss BEF 920 million.

The social plan contains a number of "classic" items: compensation for breach of contract, closure premia and a "golden farewell" of BEF 400,000 per worker. These measures cost about BEF 600 million. An additional BEF 50 million will fund early retirement options (from as early as 48 years old).

An innovative element of the plan is a "job premium". Several studies have shown that workers who receive high golden farewells settle into the unemployment system on a relatively permanent basis because working becomes financially unattractive. The Levi plan tries to tackle this problem by promising extra premia for those who find further employment: BEF 150,000 for those who find it within the first four months; BEF 100,000 within eight months; and BEF 45,000 within a year.

A second innovative element is a "training premium". This premium also has the goal of preventing former employees from settling down into the unemployment system. Those who follow extra training oriented toward new employment will receive a monthly training premium of BEF 10,000, with a total maximum of BEF 60,000.

To support the active search for new employment, a unit will support and guide the employees. This includes outplacement opportunities and the possible reorientation of careers through retraining programmes. If these efforts still fail to result in new employment, a monthly premium of BEF 3,000 will be offered for a maximum of three years. A little extra might also be made available in the year 2002. The company management is willing to honour a profit-sharing agreement signed in 1997 - the amount of the possible bonus will, however, depend on the company's results and profits. "We shall have to wait and see whether this is in fact anything more than a lot of hot air," commented a union representative.