SAS call centre employees accept wage cuts

In order to secure their jobs, about 200 employees at the SAS airline's call centre in Denmark accepted a 10% cut in their basic pay in January 2004. The alternative was a relocation of the call centre to the Baltic countries. Trade union representatives and other parties have called the wage cut part of a 'vicious spiral'.

In autumn 2003, Scandinavian Airlines System (SAS), the Scandinavian-based air carrier, decided to relocate its ticket-clearing operations from Denmark to India, where wages are considerably lower than in Denmark but skills are regarded as equally high. This meant the loss of 185 jobs from 1 April 2004. The airline also hinted that it was considering relocating its call centre to the relatively low-pay Baltic countries - the English-speaking telephone sales operation is already located in Tallinn, Estonia. The Danish Union of Salaried Employees in SAS (Luftfartfunktionærernes Fagforening, LFF) announced in January 2004 that the 200 Danish call centre staff had accepted a wage cut in order to head off this outsourcing and the loss of their jobs. According to LFF, all the Danish call centre staff have agreed a monthly pay cut of DKK 2,400, or about 10%. Some of the wage loss can be recovered through a bonus scheme which rewards the best sales staff.

This is not the first time that SAS staff have accepted a wage cut to avoid dismissals. In December 2001, employees accepted a 6% reduction in wages and working hours and thus avoided 100 redundancies (DK0201124N), and a few months later pilots, ground staff and salaried employees accepted pay freezes as part of a cost-cutting and restructuring exercise (DK0304102F). In the latest case, there are no guarantees that the Danish jobs will be secured in the longer term. Nicolas E Fischer, the president of LFF, admits that there are no assurances as to future developments and that if the airline finds it profitable it will relocate anyway - a trend which applies not only to SAS. This viewpoint is shared by labour market researchers, trade unionists and some senior managers, who have called the SAS wage cut part of a 'vicious circle'. A recent interview-based survey of 202 managers in the industrial sector conducted by the Institute for Opinion Polls (Institut for Opinionsundersøgelse) found that about half of them are contemplating the outsourcing of activities to other countries in the coming years.

Shortly after the announcement from SAS, the Union of Commercial and Clerical Employees in Denmark (Handels- og Kontorfunktionærernes Forbund, HK) - the largest trade union in Denmark - announced that it would neither recommend nor accept wage cuts in return for preserving jobs for its members. The union states that agreements without prior collective bargaining undermine the entire system, and that redundancy notices may be preferable to incremental wage cuts.

The 2004 collective bargaining round between SAS and LFF for SAS white-collar staff was deadlocked in early February, and the parties have asked the Public Conciliator to find a solution. SAS demands a 3% general wage cut in 2004 and no increases until 2007, while LFF wants guarantees that the company will not make new demands for further savings after the conclusion of the collective agreement.

The problem of outsourcing of this kind of job is significant in Denmark, which has no possibility of competing on wages in a situation where the outsourced work goes to countries where employees' skills have been upgraded to a high level. This puts the Danish educational system and research institutions under pressure to find ways of maintaining 'intelligent jobs' at Danish wage levels.

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