OTE cuts costs in three-year deal with union

Printer-friendly version

After difficult negotiations lasting almost three months, the management of Greece’s biggest telecommunications company (ΟΤΕ), and the Federation of OTE Employees (ΟΜΕ-ΟΤΕ) reached a preliminary agreement on 23 September to cut labour costs. The deal sets out a tough programme of pay cuts and reduces the firm’s working week to 35 hours, but avoids lay-offs and secures industrial peace for the next three years. The agreement is due to be signed after final approval by the parties involved.

Background

The Hellenic Telecommunications Organisation (OTE) is the largest telecommunications provider in the Greek market and, together with its subsidiaries, forms one of the leading telecom groups in South-eastern Europe. Up until 1996 OTE was a state-owned monopoly, but since then the Greek State has been gradually reducing its share capital in the firm. Deutsche Telekom agreed a deal with the government in 2008 and, since 2011, has held a 40% stake, with the government’s share at 10%. The OTE group offers broadband services, fixed and mobile telephone services, high-speed data communications and leased-line services. It is also involved in satellite communications, managing its extensive real-estate portfolio and offering consultancy services. OTE companies employ over 30,000 people in four countries.

Cost-cutting proposals

Management want to save €100 million per year over the next three years. In order to do this they suggested several measures during negotiations on the new collective agreement with the Federation of OTE Employees (ΟΜΕ-ΟΤΕ). These included:

  • the abolition of ‘jobs for life ’ affecting 75% of company employees;
  • a pay freeze, plus a freeze on the service benefits of 2.2%;
  • a 20% cut in weekly working hours and a corresponding cut in wages;
  • the introduction of flexible working, such as part-time and job rotation;
  • a new pay scale based on responsibility and productivity;
  • job cuts through voluntary retirement;
  • reducing allowances;
  • restricting trade-union leave to the minimum legal requirement;
  • rationalising sick leave so that full-time employees can no longer claim as many months in total sick leave as their years of service;
  • abolition of special leave (for example, to allow workers to celebrate their name day);
  • abolition of the youth fund allowance to employees ‘children.

In addition, the company also wanted to stop the practice of paying nine months’ salary to workers with 35 years of service leaving voluntarily, on top of their lump sum payment (although these employees would still be entitled to the lump sum).

Management also suggested streamlining disciplinary rules, with penalties to match the severity criteria of any violations.

Union reaction

ΟΜΕ-ΟΤΕ rejected the proposals, suggesting instead:

  • pay cuts for the company’s top management;
  • a pay freeze for workers for a at least two years and the safeguarding of current posts;
  • immediate implementation of a voluntary retirement programme for employees nearing retirement:
  • a cut in spending on advertising and sponsorship;
  • a joint development plan of the Hellenic Telecommunications & Post Commission
  • making a business plan for the company’s development;
  • cutting pay by a maximum of 10%, with the implementation of a 35-hour week for three years;
  • a guarantee of no lay-offs during this time.

Unions say ΟΤΕ is still a profit-making company, and a fall in income is no reason for employees to lose wages and acquired rights.

Initial agreement

An initial agreement was reached on 23 September by unions and management on a three-year collective agreement valid from the beginning of 2012 until the end of 2014.

The agreement provides for:

  • a 12% cut in pay for 2012;
  • an 11% cut in pay in 2013, although calculated on 2011 earnings, not on the salary from January 2012;
  • a further cut of 10% in 2014, again calculated on 2011 earnings;
  • implementation of a 35-hour week (seven working hours per day instead of nine) and preservation of the five-day week;
  • maintaining unaltered for at least three years the annual 2% maturation for pay scales and pensions;
  • renegotiation of the youth fund, called for repeal by the company.

It is particularly important that the company has agreed not to resort to work rotation or terminate any employment contracts for economic or technical reasons during the agreement, while about 2,000 employees nearing retirement are to be given incentives to go.

The firm will revert to current working hours and wages from January 2015.

Reactions to the agreement

A spokesperson for ΟΜΕ-ΟΤΕ said the agreement safeguards jobs, while the Greek General Confederation of Labour (GSEE) welcomed it, saying:

The agreement between ΟΜΕ-ΟΤΕ and ΟΤΕ….. is the result of free collective bargaining…which, under particularly hard conditions, is safeguarding jobs and the rights of the company’s employees…. The trade unions, through their actions and reactions, strengthen the institution of collective employment agreements and provide solutions that have the best possible results for themselves and for the enterprises for which they work.

The company’s President and Managing Director Michael Tsamaz said:

In this critical period… we found common ground with the representatives of the employees to reduce the labour costs without having to resort to lay-offs.

Commentary

Against a background of national economic difficulties, with other companies altering collective agreements and implementing measures such as work rotation, or cutting jobs, the OTE agreement seems to have satisfied both workers and management. It will allow ΟΤΕ to cut its labour costs and, at the same time, secure industrial peace for the next three years. Employees will see their earnings drop, but will keep their jobs.

Elena Kousta, Labour Institute of Greek General Confederation of Labour (INE/GSEE)

Useful? Interesting? Tell us what you think. Hide comments

Eurofound welcomes feedback and updates on this regulation

Add new comment

Click to share this page to Facebook securely

Click to share this page to Twitter securely

Click to share this page to Google+ securely

Click to share this page to LinkedIn securely