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Telefonica revise redundancy numbers after union intervention

Thu 2th Jun 2011

Telefonica's proposal to slash it's Spanish workforce by up to 6'500 will cost around 400,000 euros per employee, a works committee member said yesterday.

The secretary general of the CCOO labour union's telecommunications sector, said that at a meeting with management held earlier in the week, Telefónica announced it was returning to its original plan to shed 6,500 jobs - 20% of their Spanish workforce - over 3 years period, instead of 8,500 over 5 years. Their reasons for the change of decision were the high costs of compensation to the government for state unemployment benefits resulting from the layoffs.

The new plan will cost the company 2.6 billion euros instead of 3.4 billion euros for the previous number of redundancies.

The Unions were also unhappy with Telefónica's proposal to pay workers 66% of their salary until they retire instead of the 70% agreed in a previous plan from 2003. The layoff plan is open to workers over 54 years old.

Last week Labor Minister Valeriano Gómez said that Telefónica would have to meet the costs of the states additional burden of unemployment benefits and social security payments of every worker that it makes redundant. As a result of this move by Telefonica the Ministry is also drawing up legislation that obliges profitable companies to pay the costs to the state of laying off workers under any downsizing plan. Telefónica's earnings hit a record 10 billion euros last year.

Telefonica's announcement to downsize it's Spanish workforce by 8'500 last month coincided with the introduction of a bonus scheme for 1,900 managers worth 450 million euros over 5 years. Chairman César Alierta justified this bonus scheme as being necessary to hold on to key employees, but asserted that the redundancies were required in order to keep the company competitive.

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