Sept. 15 (Bloomberg) -- France Telecom SA, Europe’s third- largest phone company, pledged to help employees better cope with stress from a reorganization plan that unions blame for a spate of suicides.

French Labor Minister Xavier Darcos, who met today in Paris with France Telecom Chief Executive Officer Didier Lombard, said he’s asked the company to start talks with staff representatives to establish systems to spot signs of depression and suicidal behaviour in workers.

“The first priority is to stop the contagion that’s led to this infernal spiral of suicides,” Lombard said at a press conference after the meeting.

Unions says 23 France Telecom employees have taken their own lives in the last 18 months, with the latest being a 32- year-old woman who plunged to her death from her Paris office on Sept. 11. France Telecom said on Sept. 10, after a union demonstration, that it was suspending the reorganization until Oct. 31 and would increase medical staff by 10 percent.

“In many cases the choice of where they committed suicide and notes they left show that problems linked to their professional environment played a large role,” said Xavier Major, a representative of the CFDT union, in telephone interview. “The suicides then feed on each other, because each one further makes people fragile and poisons the work environment.”

Competitive Environment

Paris-based France Telecom has about 100,000 employees in France. The last restructuring plan cut 16,000 workers in the past three years. The company, which until 1997 was state- controlled and a part of the French “public service,” has had to adjust to the fast-moving, competitive global telecommunications market. The state now owns about 24 percent of the company.

“People who have stayed with the company since the privatization have shown a real ability to adapt,” Major said. “But in recent years the pace of restructuring plans has increased and many workers have lost their sense of place. A plan is put in place and then changed a month later. It’s becoming harder and harder for team leaders to convince their team members to follow them.”

Still, the phenomenon is difficult to comprehend, some management experts said.

“There are stress levels obviously associated with the ambiguity and uncertainty of corporate restructuring, but I’ve never heard of an actual suicide attempt tied to it, and obviously you’d have a very hard time proving it,” Stanislav Dobrev, a professor of organizational behaviour at business school INSEAD, near Paris, said in a telephone interview.

Renault Case

To be sure, the suicide rate at the company is not vastly different from the country’s average. France had a suicide rate of 17.6 per 100,000 people in 2005, according to the World Health Organization.

In 2007, French carmaker Renault SA was hit by a similar string of suicides by employees, prompting the company to pledge to spread the workload more evenly and improve computer and financial-management training.

About 100 France Telecom employees demonstrated in Paris on Sept. 10 after a 49-year-old technician stabbed himself with a knife on learning he had been demoted. On Sept. 14, a 53-year- old employee tried to kill herself by overdosing on barbiturates, Agence France-Presse reported. Both survived.

On Sept. 18, the company will begin negotiating with workers’ representatives to find ways to curb stress, Lombard said last week. Today, he promised that team leaders would be trained to spot signs of distress, and that the company will put in place an employee hotline.

‘More Humane’

The postponed reorganization is unlikely to have a significant impact on the company’s margins, said Michael Kovacocy, an analyst at Daiwa Securities in London.

“It’s not going to move the needle,” he said. “There are many ways they can make the margin. One has to keep in mind that much of the company is now actually outside of France.”

France Telecom, like other telecommunications companies in Europe, has been reorganizing operations to slash costs and stem a drop in profit as the economic slump prompts consumers and businesses to cut back on phone calls and data transfers. The company’s first-half profit fell 5.1 percent, and France Telecom said the level of business in the second half is likely to be “slightly lower.”

Compounding the company’s challenge, about 65 percent of the 100,000 employees in France have civil-servant status and cannot be easily fired. The government agreed to not change existing employees’ status in an accord with unions during the company’s privatization.

Faced with that constraint, France Telecom has tried to reassign people to different jobs, to relocate them or encourage them to start their own businesses, with a guarantee of a job if they want to return, the company said.

“It is impossible for us not to move, but we are trying to construct a social contact that’s more humane,” said Lombard. “The France Telecom of December will not be the France Telecom of today.”

To contact the reporter on this story: Gregory Viscusi in Paris at gviscusi@bloomberg.netMatthew Campbell in London at mcampbell@bloomberg.net

Last Updated: September 15, 2009 11:49 EDT