Talks open on change and share plan at Telecom

Management and trade unions at the state-owned Telecom Eireann have established a joint negotiating group to facilitate the transformation of the telecommunications company by concluding an agreement on a IEP 110 million cost-reduction programme, change and flexibility and a novel Employee Share Ownership Plan (ESOP).

A joint management/trade union Joint Strategic Consultative Group (JSCG) has been established to tackle the job of negotiating an agreement to help to transform state-owned Telecom Eireann to meet current and future competitive challenges. The key issues which the JSCG expects to address before the end of April 1997 are a five-year, IEP 110 million cost reduction plan, change and flexibility proposals and the question of an Employee Share Ownership Plan (ESOP), first proposed by the trade unions.

The company's 11,000 unionised employees are seeking a shareholding of up to 15%. They have been offered 5% by the Government, the main shareholder, in return for verifiable savings. Bridging the gap between the two positions will be a key element of the joint negotiating process as will the agreement of the company's partners, the Dutch/Swedish consortium, KPN/Telia. KPN/Telia has a 20% stake in Telecom with an option to increase its holding to 35% at a later stage.

In a jointly drafted communiqué issued to all employees, the JSCG explained that while the company's cash-flow position is good at present, aided by a booming economy, the competitive threats it faces are intensifying. A new private company, Esat Digifone, is now operating in the expanding Irish mobile phones market. The joint communiqué acknowledged the paradox of trying to convince staff of the need for radical change and cost reduction at a time when business is growing, but points out that:

"There is a shared analysis that says it is better to make the necessary changes from a position of strength rather than allow things to drift to a point where radical and unplanned changes have to be made in a crisis situation."

However, it is clear from the communiqué that a major gap separates the two sides. For example, it says that the company would like the unions to agree to forgo pay rises agreed at national level under Ireland's new three-year national agreement, Partnership 2000. In reply, the unions say that some of the management proposals are "beyond what could be negotiated".

The Minister for Transport, Energy and Communications, Alan Dukes, wrote to David Begg, general secretary of the Communications Workers' Union on 18 February, noting that the Government had offered the employees 5% of the company in return for the "conclusion and verified implementation" of necessary restructuring and cost reductions. On the unions' claim for a stake of up to 15%, he said the Government was open to "practical and feasible proposals" by the staff to purchase, at full value, shares in excess of 5%, "when it is satisfied that this will assist the future development of the company and that conditions relating to the initial 5% are satisfactory."

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