Deutsche Telekom signals more cuts

Germany's Deutsche Telekom wants to step up its efforts to cut labor costs and boost competitiveness by redeploying a large number of its civil servants and slimming down its bloated administration.

Thomas Sattelberger, who steered Deutsche Telekom through tough negotiations with trade unions last year, told reporters that personnel accounted for 27.8 percent of costs compared with 21.5 percent at French telecoms group France Telecom. Deutsche Telekom has around 250,000 employees worldwide, France Telecom has some 200,000. In Germany, Deutsche Telekom has a staff of 150,000, of which some 60,000 are civil servants.

The Bonn-based company aims to save up to 4.7 billion euros in costs by 2010, including 2 billion last year, a large part of which is to come from reduced labor costs.

Last year, Sattelberger negotiated a deal with labor after a stand off with unions, allowing Deutsche Telekom to cut costs by moving 50,000 staff into new lower-paying service units.

The company also implemented a program in 2006 to cut 32,000 jobs by the end of 2008 through voluntary redundancies which will also contribute to savings. Sattelberger said the company will meet that target but will not set up another program.

But this will not be enough, according to analysts, who expect that more jobs will have to go between 2009 and 2011 if Deutsche Telekom is to become competitive with its rivals.

Like other former monopolies, Deutsche Telekom has to deal with technology changes that have made many old jobs obsolete. The companies also have to deal with the historical burden of civil servants with life-long contracts.

"We are in good talks with public sector employers to take over staff," Sattelberger said, adding that a few thousand civil servants have been redeployed between 2004 and 2007.

Sattelberger, one of Germany's toughest and most seasoned personnel managers, declined to say how many civil servants Deutsche Telekom hopes to move but company sources said the target is around 9,000 by 2010.

However, Sattelberger said the company will also recruit 4,000 new employees targeting younger staff and experienced experts in the areas of information technology, hi-tech product development, business management, sales and service.

Agencies

(China Daily 01/22/2008 page16)