Agreement reached on terms of MATÁV workforce reduction

In September 2004, an innovative agreement was reached by management and employee representative at Hungary's MATÁV telecommunications company on the measures to accompany a major workforce reduction. Under the deal, redundant employees may chose from several options, which will receive relatively generous funding by the company.

In summer 2004, the management of Hungarian Telecom (Magyar Távközlési Rt, MATÁV) announced a plan to 'streamline' the company’s 8,000 strong workforce. In search of a 32% productivity increase in terms of main telephone lines per employee, the company, formerly stated-owned but now fully owned by Germany's Deutsche Telekom (DT), envisaged contracting-out affecting almost 500 employees by the end of 2005, and redundancies affecting another 2,100 employees during the first half of 2005. A delegation of employee representatives - consisting of the company sections of the Hungarian Telecommunication Sectoral Trade Union (Magyar Távközlési Ágazati Szakszervezet, MATÁSZ) and the Telecommunication Trade Union (Távközlési Szakszervezet, TÁVSZAK), plus the company’s central works council - responded by submitting an extensive package of proposals for counter-measures in order to mitigate the social consequences of the workforce reduction. Following lengthy debates, at a meeting on 18 September 2004, management and employee representatives concluded an agreement on the conditions accompanying the job losses and on pay and benefits for 2005.

With regard to the workforce reduction, the main provisions are as follows.

  • 'Termination of employment at the initiative of the employer' will affect only 800 employees. The agreement includes planned figures for reducing management positions and for dismissing managers.
  • The number of employees affected by contracting-out will be increased to 805, and employee representatives may participate in preparations for decision-making in this area.
  • Part-time employment will be introduced for mothers with children aged 14, lone fathers and people aged over 50. This solution will be offered to all employees in certain units, or through individual agreements between the company and employees, provided the employee concerned accepts a 20% wage cut in exchange for a 25% decrease in working hours. At the same time, the non-wage benefits of the workers concerned remain unchanged. Moreover management guarantees that those who agree to these terms will not be made redundant in the coming three-year period.
  • A complicated departure scheme has been drawn up for employees aged over 50. Those reaching pensionable age (57) before the end of 2008 may until then be treated as having 'non-active status' (rendelkezési állomán), provided that they agree that their wages (exceeding the current national minimum wage) during this period can be covered from the severance pay and other allowances due on termination of their employment. As the collective agreement stipulates severance pay equivalent to almost 36 months’ wages, women will not suffer from a wage cut due to their lower pensionable age. Men with 'non-active status' reaching 57 may then be eligible for early retirement. The details of the 'non-active status' scheme will be elaborated later jointly by the signatories of the agreement.
  • Upon the request of a redundant employee, the notice period can be increased at the expense of the severance pay stipulated by the relevant company collective agreement.
  • Management accepts the employee representatives’ right to monitor the implementation of the workforce reduction. In order to avoid excessive overtime and/or abuse of working time rules, a special control system will be developed by improving the registration of clocking-in and clocking-out times.
  • Further measures deal with improving the company’s outplacement service, training and providing the redundant employees with an extended period of company welfare cover, in particular through contributions to various insurance policies.
  • Taking into account all the above measures, the company will implement four phases of staff reduction in the period up to 1 January 2006, by which time the number of employees will be reduced by a total of 1,800.

The agreement envisages a 5.6% pay rise on average for 2005, which will be implemented on 1 April. A special one-off bonus will be paid in the second quarter of the year in recognition of the additional tasks related to the restructuring of the company's organisation. The agreement also provides for the introduction of a flat-rate '14th-month' payment, first due in 2006.

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