Spanish telecoms group reaches union deal to cut wage bill

Spanish telecoms group Telefónica is offering staff aged over 53 years who have been with the organisation for more than 15 years, the chance to stay at home, and not work, on 68 per cent of their salary.

Under plans to reduce the group’s wage bill, staff who meet this criteria and are working in Spain will be given the option of stopping work in return for receiving just over two-thirds of their salary until they retire.

As part of broader pay and working conditions negotiated with unions in July 2015, eligible staff will remain under contract while the company continues to pay their social security and private health contributions up until they turn 65.

Up to 7,000 people are predicted to be eligible for the voluntary Individual Suspension Plan, which runs until the end of 2017, and are, at anytime, free to return to full-time work.

Telefónica expects the scheme to bring in €370m (£280m) worth of savings.

“This initiative is in line with efforts to continue advancing in the company’s transformation and simplification and it will permit greater expense efficiencies from 2016,” the group said in a statement.

The telecoms firm has undergone a number of cost cutting initiatives in recent years, including the sale of its British mobile business, O2, after reportedly borrowing nearly €50bn last year.

The group said it would use €2.9bn from its earnings to fund the plan, “which will be booked as non-recurrent personnel expenses in the fiscal year 2015”.

Industrial relations remain strongly embedded in the Spanish labour market and Telefónica itself has a long history with employee relations. The group’s 2011 plans to cut up to 20 per cent of its Spanish workforce within three years was carefully mediated with union involvement.

Despite increased tension over the UK government’s Trade Union Bill, similar incidents of union and employee negotiation are still visible in the UK labour market.

At the end of last year the GMB union in the UK worked with construction manufacturer JCB to save more than 100 jobs, after a collapse in global sales.

More than 2,000 employees of the UK organisation voted to reduce their weekly hours from 39 to 34, to decrease the number of compulsory redundancies.

Much like the Telefónica proposal, the three-month deal aimed to reduce the organisation’s wage bill.

Commenting at the time, Graeme Macdonald, chief executive of JCB said: “Our shop-floor colleagues are to be applauded for their actions. JCB and the GMB were determined to do everything possible to avoid compulsory redundancies through a combination of voluntary redundancies, early retirements and flexible working.”