Challenges to Hewlett Packard job cuts package
The plan by Hewlett Packard (HP) to cut 10% of its worldwide workforce has come under attack in France, where the axe is due to fall on 26% of the company’s staff. As the HP group has announced USD 1 bn profits for the third quarter of 2005, this restructuring exercise has raised a storm of protest. In addition, the conditions for granting state aid to companies have become a subject for debate.
On 12 September 2005, the management of Hewlett Packard (HP) announced its decision to cut some 1,240 jobs in France, i.e. 26% of the firm’s workforce. This plan constitutes the local implementation of the worldwide plan (announced in July 2005) to cut the HP group’s total staffing level by 10%, i.e. by 14,500 jobs, 5,900 of which are in Europe, Africa and the Middle East.
HP France has claimed that the California-based group has to restructure to take account of the changes in the world IT market and 'pre-empt further upheavals in the future in order to ensure its survival in the medium to long term'. The plan is to be sewn up by the end of 2005, with the job cuts being spread between now and February 2007.
The argument has in no way satisfied the trade unions.
- They have argued that for several years, the group’s results have improved noticeably, as witnessed in the figures for the 3rd quarter 2005, during which the group posted profits of over USD 1 bn.
- They cannot see any sense in the strategies adopted, since the French production sites are the most efficient in the group.
- They cannot understand the economic reasoning behind a 26% staffing cut in the French subsidiary while elsewhere in Europe only 16% of jobs are to go in the restructuring plan.
As soon as the management had announced the decision, employees at the various Hewlett Packard sites in France (from the principal centre in Grenoble in the Isère department, to the one in Issy-Les-Moulineaux in the suburbs of Paris) downed tools. The cross-union co-ordinating body, comprising the French Confederation of Professional and Managerial Staff-General Confederation of Professional and Managerial Staff (Confédération française de l'encadrement-Confédération générale des cadres, CFE-CGC), the General Confederation of Labour-Force ouvrière (Confédération générale du travail-Force ouvrière, CGT-FO), the French Christian Workers' Confederation (Confédération française des travailleurs chrétiens, CFTC), the French Democratic Confederation of Labour (Confédération française démocratique du travail, CFDT) and the General Confederation of Labour (Confédération générale du travail, CGT), launched an immediate strike call and appealed to all the French, European and American unions concerned to mobilise in order to 'make the group’s world management take its plan back to the drawing board'.
A meeting between the management of HP France and the unions was held on 23 September 2005. The latter criticised this meeting as a 'dialogue of the deaf', because neither side was ready to listen to the other, and are continuing to demand a reduction in the number of job cuts. The cross-union co-ordinating committee refused to discuss what they describe as a 'catch-all' plan. As during the merger with Compaq in 2002, the management included the elimination of the 35-hour week, pay bargaining and job cuts in the same package. The next meeting of the group-level works council has been postponed indefinitely.
Local politicians in Grenoble, where HP and the secondary employment it generates make a significant contribution to the local economy, have come up with a number of initiatives. In this context, a debate has begun as to whether companies should get state aid and whether such aid should be paid back if restructuring takes place.
At the highest level of State, the President, Jacques Chirac, expressed concern over this situation and asked:
- that firms in receipt of state grants give binding commitments on staffing;
- that the government ensure that the agreements setting up centres of excellence on competitiveness (FR0508106F) each contain a chapter on employment levels;
- that the government take the case to the European Commission and check that the company is in full compliance with its labour law obligations.
On 26 September 2005, after discussion with HP Europe CEO, Francesco Serafini, Minister of Labour, Gérard Larcher, stated that the number of job cuts 'may be reduced'.
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