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Slovak Telecom to cut workforce in 2002

SLOVAKIA'S fixed line monopoly, Slovenské Telekomunikácie (Slovak Telecom -ST), has announced plans to slash up to 20 per cent of its workforce in 2002.
ST, which was privatised in the summer of 2000 by the German Deutsche Telekom, today employs 12,306 workers. By the end of the year the workforce should be reduced to 10,000.
ST representatives said the layoffs were necessary in order to maximise efficiency at the firm as it prepares for the pending liberalisation of the national telecoms market next year.

SLOVAKIA'S fixed line monopoly, Slovenské Telekomunikácie (Slovak Telecom -ST), has announced plans to slash up to 20 per cent of its workforce in 2002.

ST, which was privatised in the summer of 2000 by the German Deutsche Telekom, today employs 12,306 workers. By the end of the year the workforce should be reduced to 10,000.

ST representatives said the layoffs were necessary in order to maximise efficiency at the firm as it prepares for the pending liberalisation of the national telecoms market next year.

"The layoffs are necessary so that our company can create effective operations and customer service, and so that we will be fully prepared for the liberalisation of the Slovak telecoms market on January 1, 2003," said ST spokesperson Gabriela Nemkyová in a prepared media statement on January 8.

"Decreasing employment is a step which will have the highest level of effectiveness for the performance of Slovenské Telekomunikácie. The plan for 2002 is to have approximately 10,000 employees," she said.

The cutbacks have been opposed by ST employees and union leaders. Milan Brlej, vice-chair of the Slovak Trade Union for Post and Telecommunications, said that rather than an attempt to maximise efficiency the layoffs were ST's reaction to stagnant growth rates for fixed lines.

"Since price hikes last July, ST is losing 15,000 customers every month. Because they are losing clients, they are compensating by laying off employees," Berlej said.

"When we discussed employment plans for the year 2002 with the management of ST, the trade unions did not agree with the proposed cuts. We consider the layoffs inappropriate."

Berlej blamed the layoffs on Deutsche Telekom (DT), saying that the moves at ST were consistent with DT operations in other European countries.

"Certainly the significant step here has been carried out by the new shareholder, Deutsche Telekom. Their policy is to have the highest possible revenues with the lowest possible expenses.

"We have seen similar behaviour by Deutsche Telekom in facilities they entered in the Czech Republic, Poland and Germany. Only in Croatia, where the government forced them to agree to a no lay-off policy before entry into the state telecoms firm, have the results been different," Brlej said.

ST said it would try to assist fired employees by providing training programmes for future occupations and by creating an "out-placement service". The firm also promised compensation packages of up to Sk30,000 ($625) for departing workers.

"Slovenské Telekomunikácie will endeavour to assist employees who are laid off, not only by providing compensation and non-standard help to enable them to cope with the terms, but we also endeavour to help them build new careers even outside our firm," Nemkyová said.

For Brlej, compensation is not enough. "A company which looks only at profit while ignoring its staff of employees is not a good company," he said.

ST was privatised in summer, 2000 by the German telecoms giant Deutsche Telekom. DT purchased a majority 51 per cent stake in the firm for one billion euros.

Since DT's entry, more and more Slovaks have switched from fixed lines to mobiles, citing convenience and lower costs.

At the end of the first half of 2001, approximately 1.7 million Slovaks had a fixed line, or 31 per cent of the population. By comparison, on September 7, EuroTel, one of the country's two mobile operators, announced that more than 40 per cent of the Slovak citizenry owned a mobile. Both Slovak mobile operators, EuroTel and Globtel have around one million clients each.

Soon after the sale of the 51 per cent stake to DT, the firm immediately found itself cast controversially in the public eye. In October 2000, it was discovered that

ST had placed frequency filters on the fixed lines used for internet access at the Slovak Agricultural University in Nitra. The filters limited data transfers for internet access and cost the user up to five times as much as original connection rates on the same lines.

ST was fined Sk10 million by the Anti-Monopoly Office for abusing its monopoly status.

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