Sony agrees to maintain jobs in return for pay freeze

Global manufacturer of audio, video and IT products Sony has agreed to present a viability plan for the continuity of its Barcelona plant, in exchange for longer working hours and a pay freeze. The agreement will preserve numerous jobs, as redundancies should now affect at most 93 workers rather than 275 persons, as first feared. Other companies have noted the strategy at Sony.

On 29 January 2009, the management and trade union representatives of the Sony plant in Viladecavalls in the province of Barcelona in northeast Spain reached a preliminary agreement (in Spanish, 7Kb PDF) involving the withdrawal of the redundancy procedure affecting 275 workers that the company had presented in December 2008. Sony is a leading global manufacturer of audio, video, communications and information technology (IT) products. Its Barcelona plant produces two million television sets a year and has a workforce of about 1,300 people.

Redundancy plans

Sony’s announcement of the redundancy procedure in December 2008 fell within the framework of the company’s global restructuring (see ERM fact sheet) and came five months after the failure to reach an agreement on the viability of the plant with trade union representatives. From the outset, the management proposed a pay freeze as part of a cost-reduction plan that would allow the Barcelona plant to reach a similar cost level to that of other Sony factories in Europe, particularly that of the plant in the city of Nitra in western Slovakia.

The trade unions were concerned about the possible relocation of production to the Nitra plant when the latter site reached full production capacity. In fact, the company in Spain plans to divest some logistics activities to another subsidiary. This new company will incorporate the 160 workers who currently perform logistics operations at Sony together with the rest of the subcontracted staff, to reach a total of 213 workers.

In response to the controversy raised by the announcement of the redundancy procedure, the management has repeatedly denied plans to relocate and has assured regional government representatives of its commitment to the future viability of the plant in Barcelona. One week after the presentation of the procedure, the management proposed a voluntary redundancy plan for 150 workers as an alternative way to solve the problem of the surplus workforce. The trade unions have warned that, in a company like Sony where the workforce is predominantly female, such measures may lead many women to abandon the labour market.

Content of agreement

The agreement includes Sony’s commitment to keep the plant in operation for 2009 and 2010, with a level of production of 1.5 million units unless a sharp decline occurs in market demand. This equates to maintaining a minimum workforce of 1,000 persons. The company’s commitment is linked to a pay freeze during this period and a maximum working time of 1,750 hours per worker, which represents an increase of 40 hours over the two years.

Although the company has withdrawn the redundancy procedure, it has allowed a six-month period for workers to take voluntary redundancy in order to reduce the workforce by 93 persons; the management considers that this number of workers is surplus to requirements.

Sony has also agreed to continue with the innovation projects that are currently underway and to introduce technological improvements and new investment to ensure the maintenance of industrial competitiveness and the future viability of the plant. Furthermore, the signatories have decided to set up a joint commission to monitor the fulfilment of the agreement.

Commentary

The trade unions that signed the agreement – the General Workers’ Confederation (Unión General de Trabajadores, UGT) and the Trade Union Confederation of Workers’ Commissions (Confederación Sindical de Comisiones Obreras, CCOO) – have praised the initiative because it involves maintaining jobs and offers a plan for the future viability of the company in the region.

Sony’s example has been observed in other large companies facing the need to reduce costs. In the first few months of 2009, the car manufacturer SEAT and the IT company Hewlett-Packard have proposed agreements based on pay cuts as an alternative to job losses; however, the proposals have not always met with the approval of the trade unions. The unions were divided at SEAT, where – in a referendum held in late March 2009 – the workers approved a pay freeze for 2009, which was one of the conditions that the company had stipulated as part of considering the manufacture of a new car model at its plant in Martorell near Barcelona. CCOO representatives at SEAT initially rejected the pay freeze proposed by UGT, the majority trade union on the workers’ committee, claiming that – unlike at Sony – the company was offering nothing definite in exchange. However, after the referendum, CCOO also decided to accept the pay freeze.

Juan Arasanz Díaz, QUIT, University Autònoma of Barcelona (UAB)

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