Workers at Greece's biggest telecoms company OTE on Friday accepted wage cuts to avoid firings in the biggest labour deal of its kind reached so far in the austerity-stricken country.
OTE, a former state monopoly which is now 40-percent owned and managed by Germany's Deutsche Telekom , expects to save 160 million euros ($215 million) over three years from the deal, the company said in a statement.
OTE will introduce a 35-hour working week until 2015, translating into an average 11% pay cut. In exchange, management pledged not to fire any personnel. A 40-hour working week and current wages will be reinstated in 2015.
"The single, exclusive and clear purpose of this agreement is to save jobs," the OME-OTE labour union said. The union's board is set to meet on Monday to approve the deal.
GSEE, Greece's biggest labour union, welcomed the agreement, saying it was saving jobs at a time when the government and its international lenders are pushing "anti-labour" measures.
Greek unemployment is soaring to record levels of about 16% and is set to rise even higher, as the recession is deepened by EU/IMF-imposed austerity policies to save the debt-laden country from bankruptcy.
More than 200,000 people have lost their jobs over the last 12 months, boosting the jobless number by almost 40% year-on-year.
A LITTLE HELP
"In this turbulent period, we succeeded in reaching an agreement on measures that can improve the company's competitiveness, whilst ensuring its uninterrupted operation," OTE's chief executive Michael Tsamaz said in a statement.
Tsamaz had set workers a September deadline to agree to cost-cutting measures of 300 million euros by 2015, otherwise he threatened to push for dismissals.
Further savings will follow, said Tsamaz who is under intense pressure from Deutsche Telekom to cut costs. The German company has written off almost half of the about 4 bln euros it has spent on OTE since 2008, when it first bought a stake to expand its footprint in the Balkans.
Outdated labour rules from OTE's days as a state monopoly are boosting its labour costs, preventing the company from lowering prices to compete with rivals.
OTE has lost about a fifth of its Greek fixed-line clients over the past two years, with market share eroding to about 65%. More than three quarter of the 11,000 workers at its Greek fixed-line operations are virtually unsackable.
Payroll costs account for 36% of OTE's Greek fixed-line revenues, as opposed to just 9% at its much more profitable mobile unit Cosmote.
"Given that collective agreement talks are dragging for long … we consider the agreement as a major plus," analyst Vassilis Raptis said in a note.
OTE shares outperformed the Athens bourse, trading 0.3% lower in Athens, compared with a 3.9% drop in the General Athens index .
But other analysts remained sceptical. The real, average pay cut could be about 2 percentage points lower than indicated in the press release because the deal does not scrap seniority bonuses that kick in automatically each year.
"It looks like a compromise that will help OTE's numbers just for a year or so — at the end of 2012 they will have to revisit the cost issue," said an analyst who declined to be named.
