Union finally caves in; DT strike to end

21 Jun 2007

Ver.di, the main trade union representing striking workers at German incumbent Deutsche Telekom (DT) yesterday agreed to a 6.5% pay cut for about 50,000 staff, putting an end to the first strike in more than a decade at the German operator, reports the London Financial Times. The reduction was less than the 9% cut DT had wanted to impose, but more than three times the 2% reduction employees would have faced without any new deal. In return for the pay cuts, and an increase of four hours to the working week, DT extended job guarantees by one year until 2012 and pledged some ex gratia payments to staff. Both parties agreed to freeze pay negotiations for all staff until the end of next year. The 15,000 staff who have been on strike for more than five weeks would gradually be returning to work and employees would formally approve the agreement next week, Ver.di said. The company said the agreement would enable it to reach its cost savings target of EUR500 million to EUR900 million (USD671.3 million to USD1.21 billion) by 2010. Falling revenues from traditional fixed line telephony and sharp competition on mobile phone and internet services have put the company’s earnings under pressure. DT’s website says ‘the cut in salaries is being cushioned step-by-step in a socially-conscious manner’. Analysts believe the agreement will reflect well on DT’s CEO Rene Obermann, who will be ‘cushioned’ from the pay cuts himself, with his total earnings for the full year 2006 exceeding EUR2.1 million, in salary, bonuses and stock options.

Germany, Deutsche Telekom (DT)