Disputes over outsourcing in advanced technology sectors

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Attention in Spain has again focused on "downsizing" recently. There have been disputes in October 1997 at Radiotrónica and Sintel over the policy of subcontracting and "outsourcing". What is new is that this policy is now being applied by banks and high-technology companies working in information technology and electronics.

The strategy of downsizing is becoming increasingly well-established in Spanish companies. This policy is reflected in the trend towards subcontracting and "outsourcing" of the more labour-intensive tasks, in order to reduce labour costs .

Over the last year, three disputes associated with the policy of subcontracting have emerged. Before summer 1997, there was a dispute in the banking sector over its intention to decentralise computer equipment maintenance. In October 1997, two more companies have been added. The first, Radiotrónica, a large company specialised in installing telecommunication networks, has presented a redundancy procedure (expediente de regulación de empleoor ERE) to dismiss 65% of its workforce and to subcontract new staff. A similar dispute has also broken out in Sintel, a company devoted to installing and maintaining telephone lines and equipment, which also plans to dismiss 62% of its workforce. This company was a subsidiary of Telefónica and at present belongs to the Cuban-American entrepreneur Más Canosa, a well-known extreme right-wing leader.

Generally, this entrepreneurial strategy involves the process of merger and technological and organisational reorganisation. Occasionally, it is due to simple economic reasons and is carried out within the redundancy procedure laid down in the 1980 Workers' Statute. In addition to similarities in the procedure, the employers' proposals are similar: early retirement, voluntary redundancy and transfer to other companies within the group .

Employers' objectives and union responses

In the 1980s this policy of workforce reduction, outsourcing and subcontracting was associated with the industrial restructuring of certain sectors with out-of-date and obsolete technology, such as textiles, footwear and toys. It was then mainly located in labour-intensive sectors, and was a defensive policy aimed at improving competitiveness by reducing labour costs.

Today, on the other hand, "downsizing" is found in high-technology sectors such as data processing, electronics and telecommunications which are "lean" and profit making. This situation makes the labour authorities less favourable to the application of such a strategy, whose objectives are not very different from those of former times. The aim of transferring activities towards small subsidiary companies, self-employed workers and small subcontractors is to set up a small network of interdependent companies that will make production, maintenance and services more flexible. In particular, this policy is aimed at reducing labour costs, fixed infrastructure, energy, space and maintenance costs, and safety staff. However, it is also aimed at avoiding the presence of trade unions or workers' representatives, which is unavoidable in larger companies.

The customary union response, as is the case on these occasions, consists of going to court and calling strikes. In general, the processes of restructuring and subcontracting are also associated with processes of technological innovation and the introduction of new capital goods. Consequently, negotiation involves new topics such as vocational training and reskilling, and attempts are made to save the greatest possible number of jobs. However, authorisation to begin restructuring and subcontracting also depends on the verdict of the labour authorities, as was seen in recent disputes.

Indeed, in the case of Radiotrónica, the labour authority, the Directorate-General for Employment (Dirección General de Trabajo, DGT) has issued a judgment in favour of the workers' representatives, who allege that in a lean profit-making organisation the policy of subcontracting is not justified. The DGT rejected in particular the company's intention to subcontract its own workers .


The recent cases of downsizing, outsourcing and subcontracting reveal an entrepreneurial policy that marks a new phase in companies' human resource management strategies. It is not only an organisational strategy for making production and maintenance more flexible, but also a policy for fragmenting the workforce. On the one hand we have the "nucleus" of the company, which is stable and secure and is composed of qualified staff who are faithful to the organisational concept of the corporation and to its strategic objectives; on the other hand we have the "peripheral", external workers, who are less qualified and less committed to the objectives of the company.

However, this strategy also denotes an entrepreneurial policy aimed at reducing the trade union presence in the company or even "expelling" the workers' representatives by reducing employment to the minimum volume that is necessary for central planning and business programming.

The verdict of the Directorate-General for Employment may at least provide a line of argument in support of the interests of the workers, and it may also help to avoid the increase in insecure employment in companies and sectors where technology fosters high productivity and high profitability. (Antonio Martín Artiles, QUIT)

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