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Telefónica's ERE exceeds forecasts: 3,640 requests of which 3,393 withdrawals will be accepted

Telefónica workers have massively accepted the ERE proposed by the company. 3,640 workers have signed up, a figure that exceeds the official target for planned casualties, which was 3,421. In total, the company has decided to accept 3,393 cancellations, of which 2,946 belong to Telefónica España, 391 to Móviles and 56 to Telefónica Soluciones. This implies that there will not be forced dismissals, although the final number of dismissals that will occur, after the adjustments, will be 3,420, that is, one less than those officially agreed upon when signing the ERE.

Telefónica workers have massively signed up to the ERE proposed by the company, which initially contemplated an official objective of 3,421 total dismissals. After the end of the secondment period last night, February 8, at 12:00 p.m., the total number of employees who have chosen to take advantage of the sick leave plan was 3,640, as EXPANSION has learned from sources familiar with the process. In total, the number of final withdrawals that will be accepted will be 3,393, that is, 28 less than the 3,421 initially planned. In total, 2,946 applications will be accepted at Telefónica de España, 391 at Telefónica Móviles España and 56 at Telefónica Soluciones. In this way, Telefónica’s ERE will be resolved without forced dismissals, the same sources point out. Since the proposed withdrawals have exceeded the total number of planned withdrawals, there will be 247 applications that will be denied.

3,420 total casualties at the end

In any case, on Monday the 12th there will be a new meeting between the unions and the company in which the figures will be definitively finalized, with fine adjustments. If any of the 3,393 withdrawals initially accepted could not be consolidated because the seconded employees were part of some of the “critical” units (such as cybersecurity or cloud, where there are difficulties in hiring new personnel given the strong market demand), it would be used the “bag” of 247 applications now denied to complete the figure of 3,420 total dismissals (one reduction has been reduced from the initial figure) officially agreed upon, without resorting, therefore, to dismissals.

Beneficial conditions

In a statement, the UGT union has indicated that the massive subscription to the conditions of the ERE “demonstrates that the exit conditions achieved during the negotiation by UGT have been the most beneficial to date, an issue widely supported by the staff after the closure in yesterday of the application period”. The statement from the socialist union points out that ” UGT achieved a great agreement in a scenario of maximum uncertainty and tension in the sector , which led us to make the unanimous decision as an organization to validate the agreements that would protect the long-term conditions of the workforce in a III CEV while protecting both the income and access to retirement of workers affected by a process of collective dismissals that the company considered as forced.

For their part, Telefónica sources have assessed the result of the process “positively” and highlight that “it confirms the company’s success in promoting social peace through voluntariness and dialogue with all social agents and company employees.”

1.3 billion cost

The agreement with the unions was closed on January 4, and regarding the economic impact, the operator indicated to the CNMV in a relevant fact that “the current value of the Plan’s expenditure is estimated at a provision of around 1,300 million euros (before taxes), without impact on cash. The average annual savings from direct expenses will be around 285 million euros from 2025. In any case, the impact on cash generation will be positive from 2024, as will the capture of savings, since the departure of employees is estimated to take place as early as the first quarter of 2024.” The total cost represents an expense per employee of 380,000 euros, which is a figure significantly lower than the cost of previous sick leave plans, where the average was 571,000 euros per worker.

The registration period has been kept open between January 9 and February 8 and the company’s official response will be on February 14. Departures will mainly begin on February 29 , but the ERE will be open until March 31, 2025.

Unanimous agreement

The agreement was unanimously supported by the company and the representation of the workers (UGT, CCOO and Sumados), with 24 votes in favor , zero against and no abstentions, although until the end there was uncertainty as to whether CCOO would go to approve the plan, since some areas of the union had been against the clause that established that if all the planned dismissals were not voluntarily achieved, the operator could undertake voluntary layoffs.

The initial losses planned in the agreement were 2,958 departures for Telefónica de España , almost 28% less than the 4,085 that were proposed at the beginning of the negotiations; 397 in Telefónica Móviles , almost 59% less than the initial 958, and 66 in Telefónica Soluciones , almost 19% less than the initial 81.

Therefore, the company reduced the impact of the collective dismissal by 33% in relation to the 5,124 departures that it proposed to the unions at the beginning of the negotiations.

Conditions

Similarly, the company also improved the economic conditions offered to employees who will finally leave the company and has brought them into line with those of the previous exit plan, negotiated in 2021.

In the proposal conveyed to the unions on December 21, Telefónica offered employees born in 1968 an income of 68% of the regulatory salary until the age of 63 and 38% until the age of 65.

For those born in 1967, 1966, 1965 or 1964 , 62% of the regulatory salary until age 63 and 34% until age 65, to which is added a voluntary bonus of 10,000 euros.

Meanwhile, for workers born in 1963 or previous years, it offers an income of 52% of the regulatory salary until age 63 and 34% until age 65, to which it has also added a voluntary bonus of 10,000 euros.

Likewise, the final ERE proposal by Telefónica includes the reversibility of income, which implies that in the event of death the legal heirs will receive the pending compensation.

Also included is the payment of the employee’s Social Security discount during unemployment, group insurance up to age 63, and 100% basic health policy up to age 63 (or as long as the Special Social Security Agreement is paid).

Previous cuts

Telefónica already undertook a very powerful job cut in the first decade of the century, with the departure, between 1999 and 2013, of 31,500 employees in Spain through various ERE . Of those, the last occurred between 2011 and 2013 and affected more than 6,800 workers. But these ERE were highly criticized for the cost they entailed for the State . Especially since the last ERE coincided with the obtaining of large accounting profits from the purchase of 50% of Vivo from Portugal Telecom, which revalued the 50% stake that Telefónica already had.

For this reason, starting in 2016, the operator changed the formula and launched the PSI with voluntary cancellations that did not imply costs for the public coffers.

The first of the last three PSIs was agreed at the end of 2015 and was carried out in 2016 and 2017 and allowed the departure of some 6,300 workers from the group, at a cost of 3,685 million euros, which represents an average cost per person of about 571,000 euros.

The second , in 2019, involved the separation of 2,636 employees , which meant a provision of 1,732 million euros , with an average cost of 603,000 euros per worker.

The third, in 2021, caused another 2,982 people to leave and a provision was made in the fourth quarter of 2021 of 1,382 million euros, with an average cost lower than the previous ones, of about 463,500 euros. Altogether, since 2015, the telecom operator has managed to leave just over 11,900 employees in Spain, at a cost of around 6.8 billion, at an average of 571,400 euros per worker.

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