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

by Janko Tietz

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 WORKFORCE
As 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 CUSTOMERS
Ver.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"