Telefónica: what’s at the other end of the line?

1 May 2005
Gemma Galdon Clavell
In 1992, Telefónica, the Spanish telecommunications company, employed 75,000 people. Their workforce today is below 35,000. Nevertheless, telephone lines are still working and new mass markets have opened up, such as for broadband and mobile telephones. Where have all those 40,000 jobs gone? And what about the tens of thousands more swept away across Europe?

During the ‘90s, driven by World Trade Organisation directives (1997) and the European Union (1998), and following the early British example (the UK opened the telecommunications market to competition in 1984), virtually all European countries began to privatise their traditionally state-owned telephone companies. In most places, the privatisation process was divided into two phases. The market was initially opened up to competition and a percentage of the shares was sold to private investors. Then the state relinquished its control over these companies and they were handed over entirely to stockholders and the market. According to the business rationale, it was necessary to “adapt to new times”, and those new times demanded a radical reduction in labour costs and a new race to gain control over international markets through mergers and takeovers. This has pushed many companies into overcapacity and indebtedness, and to bear down more heavily than ever on their workers worldwide.

Telecommunication companies have ever since undertaken massive cuts in personnel. Remaining workers have witnessed their labour conditions become ever more precarious; the introduction of two different wage scales has put an end to the labour and social rights won over the last 40 years. This has been especially hard in those cases where workers had traditionally enjoyed civil service status, as they did in France Telecom, Deutsche Telecom and TeleDanmark. In 1999, when some telephone companies had been privatised for barely two years, work losses in SPT (Czech Republic), France Telecom (France), Deutsche Telecom (Germany), OTE (Greece), Matav (Hungary), Eircom (Ireland), Telecom Italia SPA (Italia), Rom Telecom (Romania), Telefónica (Spain), Telia (Sweden), Suisscom (Switzerland) and BT (United Kingdom) amounted to over 340,000 people; according to the International Labour Organisation, 125,000 of these were the result of British privatisation.

In Spain, the business strategy adopted by Telefónica, which is currently ranked 8th among telecommunications companies in the world and expects to climb two or three steps up the chart soon, is very similar to that of other telecommunications giants: massive early retirements and dismissals, the contracting out of services (and workers) through the creation of dense networks of subsidiaries and outsourcing companies, where labour security and conditions are not guaranteed. By employing freelance workers, for example, Telefónica has managed to get rid of its social obligations as an employer and has transferred them to the workers themselves. According to some trade union representatives, this deceitful practice is even used on workers whose status is illegal. In some subsidiaries, workers are forced to sign their voluntary redundancy papers together with their contract, and their basic wage is so low that workers create work by deliberately causing damage in order to improve their service record and thus get higher bonuses. This explains why the telephone sector currently holds the record for consumer complaints in Spain.

The permanent deterioration in workers’ salaries and labour conditions has been coupled with the increase in executives’ benefits and bonuses. The former president of Telefónica, Juan Villalonga, left the company with a bonus of 18 million euro coming from stock options. Meanwhile, share schemes designed for employees, the genuine paradigm of “popular capitalism”, have not yielded any profit.

Workers: double victims

All these changes have led to resistance. Indeed restructuring in the telecomm-unications sector is facing strong opposition by workers and trade unions in most countries. In countries like France, Germany and Spain especially, workers and unions have called for strikes and demonstrations. In Poland, workers from TPSA, a subsidiary of France Telecom, organised a hunger strike and picket in front of the French embassy in March 2005 to protest against dismissals. In the case of Telefónica, a dozen mobilisations and general strikes have taken place since 1994.

Unfortunately, businessmen and transnationals are not the only ones to believe that progress equals neo-liberalism and that modernisation requires absolute insecurity for labour. Many trade unions have also accepted -though with nuances- this logic and have accepted its consequences as unavoidable. This attitude has undoubtedly led workers to pay the highest price in privatisation and restructuring processes. But it has also fostered the emergence of new trade union approaches, more reluctant to make agreements and in favour of directly confronting employers and government market-oriented measures, such as SUD-PTT in France, OME-OTE in Greece and Co.bas in Spain.

Telefónica, a model case

In this sense, the case of Telefónica Spain in worth noting, since resistance to privatisation, restructuring and dismissals has had a strong impact. On the one hand, it has prompted one of the most important workers’ struggles in the last few years - led by workers from a company called Sintel. On the other, it has favoured a new alternative union, Co.bas, focused on the defence of a combative and class-based union movement linked to new social movements and initiatives like MayDay.

Sintel, a Telefónica subsidiary specialised in installing networks, was sold to Jorge Mas Canosa, an anti-Castro Cuban-American entrepreneur, in 1996 for a ridiculous amount while Parliament was dissolved. In the following years, the company submitted three collective redundancy schemes and finally, on 22 December 2000, it dismissed the 1,201 remaining workers. It was then that Sintel workers, with a trade union membership rate of over 80% (especially in the Comisiones Obreras (CO) union) and a long history of struggle, decided to camp at the very heart of Madrid financial centre, right under the nose of the country’s business elite.

For more than six months, around 1,500 people, including whole families, lived in the Paseo de la Castellana, giving a face to the victims of massive dismissals and business “modernisation” and challenging the neo-liberal rationale. It was a protest well received by all citizens and it got a lot of support and signs of solidarity. Finally, the government - led at the time by José María Aznar - was forced to find a solution and to guarantee a new job for all workers in similar conditions. Despite this, in the months that followed the main trade unions accepted employment in subsidiaries with precarious contracts and much lower salaries than in Sintel. The workers’ assembly rejected this solution and, during the last year, workers have organised and started their own company, Sintratel, a kind of cooperative that has already managed to guarantee decent salaries for all.

Because of their opposition to the agreement-based policy followed by CO, some Sintel workers were expelled from the union and they have now joined Co.bas, a “class, participative, assembly-based and combative” union born not long ago, as a result of workers’ committees rejecting the “official” practices of CO. in Telefónica. Just two months after its creation, Co.bas became the third largest union within the company throughout the country and the top union in the Telefonica union elections in Barcelona and Madrid. It has now around 2.000 members across Spain.

Beyond fixed telephony

But the restructuring of traditional telephone companies has not been the only relevant event in the telecommunications industry in recent years. Since the emergence of new big markets based on broadband and mobile telephones, it is now thought that fixed telephony is no longer a profitable sector, and companies have started a wild race to get into these new areas by investing millions and buying state licenses. The world map has become a shadowy web of fusions, joint ventures, offers, bids and efforts where the same names keep coming up again and again and in their scramble to beat each other. Telefonia, for instance, the dominant telephone company in Latin America, has just bought up part of the Czech telephone industry and is bidding for the Turkish market.

In most cases, the industry has used these new markets to get rid of the burden of labour conditions from the past, and many companies focussing on broadband and mobile products have become legally “independent” from their predecessors in fixed telephony. States have also contributed to this by accepting new agreements with these new sectors, which has led to using anti-union strategies and exploring the limits of legislation and the resistance of workers, not to speak of plain illegality. In Great Britain, for example, when workers from T-Mobile tried to organise trade union elections, the company hired a US company specialising in breaking up unions so that workers would be intimidated. Ironically, Deutsche Telecom and France Telecom, two companies that would never dare to use these tactics in their respective countries, own T-Mobile. This race to reduce costs and avoid business responsibility has also led to the general practise of migrating call centres. Telefónica, British Telecom and France Telecom have created call centres in Morocco, India and Mauritius, respectively. In the case of Telefónica in Morocco, the workers’ training depends on the AECI, the Spanish Agency for International Cooperation.

From present towards future

The present in the telecommunications services is characterised by the business offensive, anti-trade union practices, the division of workers, the erosion of labour rights, state complicity and, in many cases, also the trade unions’ passivity. Nevertheless, European workers at the European and international level show increasing signs of a fighting spirit and self-management. At the other end of the line there is always a businessman with his pockets full and an over-cautious trade union official, but also a worker ready for struggle. n

Useful websites

www.ilo.org
www.sindicatocobas.org
www.union-network.org

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