Unions respond to partial privatisation of France Telecom

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After a long period of indecision, the French Government decided in September 1997 partially to privatise France Telecom. The main trade unions are attempting to mobilise staff in opposition to this move.

In 1991, France's PTT administration was split into two separate entities: the Post Office (La Poste) and France Telecom. The latter became an autonomous state-owned authority. The plan to transform it into a limited company was born in April 1993 and a law implementing the change in status, effective as of 1 January 1997 was voted upon in June 1996. In March 1997, the Government put forward a timetable for the sell-off of part of France Telecom's capital. The process was put on hold due to the dissolution of the National Assembly and then finally suspended on 3 June 1997 following the Left's election victory (FR9706149F). The Left's policy programme was to re-examine the privatisation process. However, on 17 July, the new Prime Minister,Lionel Jospin, gave the former socialist Minister for Employment, Michel Delebarre, the task of undertaking a "thorough social dialogue." His report was submitted in record time and gave a notable recommendation that a third of the company's stock be put on the market.

Partial privatisation

The Government announced the precise details of this partial privatisation in early September. Under the conditions stipulated, 20% of France Telecom capital is to be sold off as early as 22 September 1997. The actual share price will be set on 6 October and the first quotation on the stock market will take place on 20 October. Furthermore, 3%-4% of company stock is to be offered to company employees at preferential rates. Finally, France Telecom and Deutsche Telekom are each to acquire a 7.5% holding in the other company. If the relative size of the companies is taken into account, this transaction will cost France Telecom and Deutsche Telecom FRF 20 billion and FRF 15 billion respectively (for a total capitalisation estimated at around FRF 200 billion). A further 6% or 7% increase in capital is provided for in the second half of 1998.

One of the main arguments put forward in favour of the sell-off, more particularly by Michel Bon, president of France Telecom, is the necessity of facing up to the total deregulation of the European telecommunications sector scheduled for the 1 January 1998. France Telecom would face a handicap if it were not quoted on the stock exchange and would be prevented from developing its international partnerships with Deutsche Telecom and Sprint, also in Germany. However, the current status of France Telecom has not posed any problems for international investment, such as the acquisition of half of Argentina's national telephone company when it was completely sold off. Nor has the fact that France Telecom is not quoted on the stock exchange prevented it from recording net results of FRF 8.9 billion during the first half of 1997, an increase of 40% compared with the first half of 1996.

The Government is emphasising that public service obligations will not be sacrificed. The "Fillon law" approved prior to the change in government includes the notion of "universal service", which means the guarantee of equal access by all customers to telecommunication services. This law provides for the setting up of a compensation fund which would allow France Telecom to receive financing from its competitors. The social element contained in the Delebarre report has influenced the restructuring measures for France Telecom announced by the Minister of the Economy, Dominique Strauss-Kahn, and his Secretary of State for Industry, Christian Pierret. The company is to be "a pioneer in the employment of young people" and thus go beyond the plan for the recruitment of 6,000 young people proposed last January. However, the notions of the strengthening of "universal service"and job creation would not immediately seem to be in line with the need to attract private investment. The business press is not convinced that these social aims meet the evaluation criteria used by the stock market. These arguments have not convinced the unions.

Trade union responses

The CGT (Confédération Générale du Travail), which is still the main union at France Telecom with almost 30% of the vote in union elections (a 10-point fall from its previous 40%), categorically refuses the opening of the company's capital. This union prescribes "fierce opposition to any type of privatisation, including capital sell-offs," wherever this decision does not meet the need to construct a new concept based on social progress.

SUD-PTT (Solidaires, Unitaires et Démocratiques), the second largest union within France Telecom with 26% support, is resolutely opposed to a decision "taken hastily, as if the Government were ashamed of its decision." The union recalls that during his election campaign, Lionel Jospin had announced that he would call a halt to the privatisation process and that employees would be consulted, ("we shall put the question to them"). Sud is organising a referendum among the company's 150,000 employees before 18 September. In places where voting has already taken place, sometimes with the support of the CGT or the local unions of CFDT (Confédération Française Démocratique du Travail); the results have shown a large turnout (60%-70% of the electorate) and a strong majority of more than 80% against the sell-off.

The CFDT-affiliated Unified Federation of Post Offices and Telecommunications, (with 18% support at France Telecom) points out that "the 1990 reform enabled France Telecom to expand and to create international ties without any problem and no serious argument could justify substituting this reform by a capital sell-off". The union's standpoint is in line with that of Nicole Notat, secretary general of the CFDT, who has adopted "a pragmatic approach". FO (Force Ouvrière), with 14% support ,is not opposed to a partial sell-off, but does not actually call for privatisation.

This majority opposition to the sell-off has not immediately given rise to industrial action, as a result of recent strike history at France Telecom. A strike in October 1993 was a huge success (75% of employees took part) and slowed down the privatisation programme. Two further strikes in May 1995 (with 65% employee participation) and in October 1995 were similar success stories. Anxieties over company and employee status then led to a huge turnout in the industrial dispute from November to December 1995. However, the indefinite strike plan launched by SUD and CGT on 4 June 1996 ended in failure for the unions with only 31% employee participation.

For this reason the unions have, for the moment, taken the decision to sound out the possibility of industrial action separately. SUD has set up its referendum and the CFDT has put the matter of the possibility of "large-scale strike action" to its members as "the only way to make the Government back down on capital sell-offs." For its part, the CGT wants to "create the conditions for employee action which could possibly escalate to a full scale strike".

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