Silent protest at proposed outsourcing

17 Apr 2007

Thousands of employees of German incumbent Deutsche Telekom (DT) briefly downed their headsets on Monday to protest about the telco’s plans to outsource up to 50,000 staff, a quarter of its German workforce, to lower-paying subsidiaries. The ‘warning strikes’ came as union representatives and DT executives met for a last official round of talks to forge what appears to be a make-or-break deal for chief CEO René Obermann. Obermann, appointed last November, wants to cut wages for call centre employees and other service staff by up to a half, saving EUR1 billion (USD680 million) a year from July. Only drastic steps will allow DT to compete with more nimble rivals, he says. High prices saw the former telecoms monopoly lose two million fixed-line customers last year as rivals lured consumers with low-priced IP telephony and mobile phone offers. The departure of previous CEO Kai-Uwe Ricke followed a profit warning at the end of last summer. A further profit warning under his successor was issued at the start of 2007.Unnamed company officials warned that failure to get the support of trade union Ver.di for the outsourcing could lead to yet another profit warning. ‘That would be the end of Obermann and DT in its current form,’ said one. The Ver.di union continues to be unimpressed. Chief negotiator Lothar Schröder, who has threatened full-blown strikes, on Monday took a defiant stance. ‘We’ve got no indication that things are going in the right direction,’ he said. Schröder wants an agreement leaving wages as they are and guaranteeing that Telekom will not sell the new services subsidiaries, adding Ver.di would consider more flexible overtime rules in return. Obermann says DT merely wants to lower wages to peer-group levels. DT could unilaterally impose new working conditions, but this could also increase the risk of a strike. The German government, which owns a third of Telekom, is backing Obermann. It was instrumental in ousting his predecessor Ricke for failing to address high costs and a sickly share price.

Germany, Deutsche Telekom (DT)