business

Deutsche Telekom Faces Huge Strikes

After fruitless talks with the restructuring German telco, union Ver.di says walkouts over wage cuts and poor working conditions are unavoidable

Germany's Ver.di trade union is planning the biggest strike since the privatization of German telecommunications giant Deutsche Telekom. It wants to meet with Telekom's business customers in an effort to force the company to yield to its demands.

It was meant to be a show of strength, but it ended up achieving precisely the opposite effect. When CEO René Obermann stepped onto the stage in the Cologne Arena last Thursday to address the shareholders' meeting of Europe's largest telephone company, Deutsche Telekom AG, he hoped to convince shareholders, in a speech lasting more than an hour, that the communications giant has a bright future -- if everyone plays along, that is.

His appeal was directed at the shareholders, management and, most of all, the company's rebellious employees. As a sign of good will, Obermann said, he would take the first step himself and "as chief executive, live up to my special responsibility and give up two months of my base salary." That comes to about €200,000 ($270,000) that the company's CEO says he will contribute to planned annual cost savings of up to €4.7 billion ($6.3 billion).

But instead of resounding applause, Obermann's pledge was met with whistles, laughter and catcalls. Hans-Richard Schmitz of the German private shareholders' association DSW said derisively that the group's board of directors, given the current restructuring, was pursuing nothing but a tactic of "panicked tinkering," while Obermann himself was spouting nothing but "empty words from his business school days."

To make matters worse, the DSL connection failed during the shareholders' meeting, preventing it from being broadcast worldwide on the Internet as planned. Many of the large number of journalists who had traveled to the meeting found themselves facing empty monitors for a period of time. For a company that earns its living selling IT solutions, this was a gaffe of epic proportions.

SPINNING OFF ONE-THIRD OF ITS WORKFORCEAs disastrous as it was, the shareholders' meeting was probably harmless compared to what Obermann will face in the coming weeks. Beginning in July, the group plans to spin off almost a third of its total domestic work force of 160,000 into a new company called T-Service. Once there, they will be asked to work four additional hours a week for a nine-percent cut in pay.

The plans have encountered fierce opposition from the Ver.di service industry trade union. "Organizational problems at Telekom can't be fixed with wage cuts and less advantageous working conditions," said the union's president, Frank Bsirske.

After weeks of unsuccessful negotiations, the union now hopes to force the group to come to terms in a broad labor dispute. Ver.di is worried that Telekom's tactics with the new T-Service unit could spill over into other parts of the group. "Once the wage cuts become reality in a new company, I guarantee that they will try the same thing throughout the group," says Frank Sauerland, Ver.di's national head of wage policy for the telecommunications industry.

Sauerland still remembers last year's collective bargaining for the customer service division at T-Mobile, a Telekom subsidiary, when Telekom demanded the establishment of a second wage scale for new hires as well as extensive wage cutbacks and longer working hours for the unit's roughly 2,700 employees. "At the time, Telekom signed a statement in which it guaranteed that the agreement would have no prejudicial effect on other parts of the group," says Sauerland. "That promise lasted less than seven months."

A LARGE-SCALE EXODUS OF CUSTOMERSVer.di cites a lasting loss of confidence in management among employees, which is only reinforced by the union's contention that management was primarily responsible for a large-scale exodus of customers. Telekom has been restructured 18 times in the last 11 years.

"The employees are unable to live up to the service commitment," says Kornelia Dubbel, a member of the company's works council, who also sat on the T-Service negotiating committee. According to Dubbel, the company's "ailing IT system"

makes it almost impossible to complete daily workloads. Up to 16 different programs have to be booted up to enter individual customer data. Employees are "condemned to idleness for minutes" while they wait, says Dubbel. Spinning off the employees into a new company does nothing to change these circumstances, she says, except that "motivation will plunge even further."

Part 2: 'A Strike Is Unavoidable'Ver.di refuses to accept Obermann's argument that Telekom's employees are up to 30 percent more expensive than the competition's. According to the union, Telekom deliberately includes all compensation above the general pay scale in its calculations, while failing to mention perks paid by competitors.

Participants in the five rounds of negotiations conducted so far have not even addressed the working conditions at T-Service for the employees who are being spun off. The union reluctantly came to terms with the new unit long ago. Instead, Ver.di's goal in the negotiations was to fight for a collective bargaining agreement that would protect employees from outsourcing, a sort of grandfathering clause meant to protect employees against the worst financial losses. But the negotiating parties were unable to produce a compromise, which leads Bsirske to conclude that a "strike is unavoidable."

STRIKE VOTELast Friday Ver.di's main bargaining committee decided to introduce a strike vote, the results of which are expected by Wednesday of this week. If the union has its way, a total of 30,000 employees will go on temporary walkouts during the three-day voting periods. No one seriously expects the strike vote to fail, especially with more than 70 percent of Telekom employees organized in trade unions. Ver.di plans to announce the results of the vote on Thursday of this week, immediately following the announcement of Telekom's quarterly figures -- and then call a strike.

Instead of planning a "wild sweeping blow," the union wants to "temporarily shut down sensitive, high-profile projects" at T-Systems, which is already ailing, says Ado Wilhelm, director of the union's labor dispute division. Beginning next week, major insurance companies, banks and industrial operations can expect to encounter reductions in their communications options. "We are deliberately not including private customers, so as not to jeopardize the general population's sympathy for our position," says Wilhelm.

DISRUPTED COMMUNICATIONS AT G-8 SUMMIT?Union officials are not even willing to rule out the possibility of a strike that would affect the communications infrastructure at the G-8 summit at the Heiligendamm Baltic Sea resort in early June, even though Telekom has already asked Ver.di to refrain from resorting to such tactics. "Of course, the company is concerned about its international reputation," says Wilhelm, "but that isn't our problem."

The union feels confident that it has its legal bases covered. Although a provider of telecommunications services is required by law to guarantee uninterrupted service, how this is done is the provider's business. Only safety- and security-related communications systems, such as those connected to the fire department, police and hospitals, cannot be the target of strikes.

The strike planners have already devised a plan that shows exactly which employees, throughout the country, can be pulled from their positions and when this can take place. It is possible that the roughly 40 percent of Telekom employees who are also government employees will take part, even though they are in fact barred from striking. "We haven't tested this yet," says Wilhelm. "But if push comes to shove, even that conflict is not one that we will shy away from." Ver.di's position is that civil servants should only be barred from striking if they work directly for the government. But, according to Ver.di, the legal situation changes the minute they become employees of a private company.

Meanwhile, Telekom has taken a demonstratively relaxed approach. If Ver.di continues to be so obstinate and insists on "preserving vested rights," says Obermann, "we will have to begin thinking about a possible sale to a third party."

But finding potential buyers is another story altogether. Ver.di's chief negotiator, Lothar Schröder, has already defined his union's approach in case a buyer is in fact found: "Then we'll simply cause trouble for them."

Translated from the German by Christopher Sultan

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