Telefónica to make 6,500 workers redundant

The Spanish Government has approved plans by telecommunications company Telefónicato make 6,500 employees redundant. The measure has been agreed with employees’ representatives and is linked to a new collective agreement, which commits the company to no more redundancies, the recruitment of at least 450 new employees and a grants programme for young workers. The company has also been forced to reimburse the Government for the resulting stateunemployment payments.

Telefónica applies for redundancies despite profits

Telefónica de España SAU held the public telecommunications monopoly in Spain until thesectorwas liberalised in the 1990s. In May 2011 the multinational company, seeking to make itself more competitive in its home market, applied for a Redundancy Procedure (ERE) which would initially have made 8,500 workers redundant. This was despite reportingprofitsof€10,000 million in 2010.

With these profits in mind, the Government said it would bring in a law obliging the company to compensate the State for the unemployment benefits received by the workers losing their jobs. Theamendment(in Spanish, 875Kb PDF) to Law 3/2011, of 18 February 2011, on Urgent Measuresfor theImprovement of Employability and the Reform of Active Labour Market Policies was enacted on 10 May. The amendment states that enterprises employing 500 or more employees that apply for Redundancy Procedures affecting workers over the age of 49 will have to compensate the government for any state benefits to which the redundant workers might be entitledif their former employer has made a profit in the previous two years. The amount of the refund will be based on the amount of unemployment benefitsclaimed byformer workers over 49, plus the social security contributions paid on their behalf by the Public Employment Services.

The most representative unions within the workers’ committee, the General Workers’ Union (UGT) and the Trade Union Confederation of Workers’ Commissions (CCOO), decided to negotiate the new company collective agreement and the redundancies at the same time, linking the conditions of the two.

Government curbs redundancies

The government’s amendment means that the company will have to pay €300 million to the Statein compensation. It is thought that the extra costs threatened by the amendment, combined with the new collective agreement negotiations, have reduced the number of redundancies the company is now seeking to 6,500. The dismissals will be progressively implemented between 2011–2013.

The new collective agreement guarantees that during the period it is in force (2011-2013), there will be no additional dismissals, whatever changes there are in working conditions, whether caused by technological, economic, technical or organisational issues. The agreement also includes the company’s commitment to recruit at least 450 new employees. The company is also to launch a grant programme providing professional training for young workers.

Other positive outcomes highlighted by the unions are:

  • the revision of professional classifications;
  • the creation of an ‘absenteeism committee’;
  • the opportunity for parents of children aged 12 and under to apply for a reduction of working hours. (Previously, this option was restricted to parents with children aged nine and under);
  • an annual pay rise of 1%.

The pay rise can be increased if profits rise as a result of increased productivity, calculated according to the Operating Income Before Depreciation and Amortization (OIBDA). Prior to this, pay increases were linked to inflation.

Union criticises agreement

The third most representative union at the company, the General Confederation of Workers (CGT), which has representatives on the workers’ committee, has criticised this agreement. The unionsaysitwill causeexcessive costs for the Government because the compensation will not include the national insurance contributions of the redundant workers that will not be paid to the social security system.

The CGT also says that it is socially unacceptable to allow enterprises that are in profit to make redundanciesduring a crisis, and points out that the new agreement leaves the way open for the company to seek approval for further redundancies from a majority of the workers’ council members.

The CGTisalso opposed to the terms of the pay rise.

Pablo Sanz de Miguel, CIREM Foundation

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