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Siemens agrees to open-ended employment guarantee

With 3,000 vacant jobs and a shortage of qualified candidates, Siemens has agreed to give all its workers open-ended employment guarantees. But the marketplace demands a flexible approach to staffing, one expert says.

The Siemens building in Munich

Siemens has 3,000 vacant positions, primarily for engineers

As companies worldwide chip away at job security for employees in the interest of maintaining a flexible work force, electronics manufacturer Siemens has made its employees an unprecedented offer.

All 128,000 Siemens employees in Germany – including those working in its subsidiaries – have been given an open-ended employment guarantee. The company may move to withdraw from the agreement in 2013 at the earliest. A previous agreement from 2008 covered only 95,000 employees and expires at the end of September.

But the move isn't necessarily altruistic. Many aspects of the global recession are over, but German companies are experiencing a shortage of highly qualified workers, such as engineers. At Siemens alone there are now 3,000 vacancies.

Lothar Adler

Lothar Adler of Siemens' combined work council praised the agreement

Lothar Adler, head of Siemens' combined work council, said the previous, limited agreement to not engage in layoffs weathered the crisis, which is something the company recognizes. As an alternative, as many as 19,000 employees had their hours temporarily reduced for a period of time.

The open-ended expansion of the agreement is “both sensible and oriented towards the future of both the employees and the company,” given current economic and social conditions, he said.

Not necessarily enforceable

But Susanne Kohaut, of the Research Institute of the Federal Employment Agency in Nuremberg, pointed out that employers other than Siemens have broken similar agreements in the past.

“It's not a really an enforceable right,” she told Deutsche Welle.

Other German companies including Daimler, Volkswagen and the Deutsche Bahn currently grant similar guarantees, and Kohaut also explained that is one way for employers to better recruit and keep a qualified workforce.

“It's good for their image,” she said. “And one doesn't lay off engineers when one thinks they might urgently be needed again in three years. Instead one keeps qualified workers and qualified employees, and doesn't suffer from the negative image of mass layoffs. And when one sees a way forward, when things start picking up again, then one can rely on those people.”

Flexibility still called for

Workers at a Siemens building

Layoffs are a thing of the past at Siemens... at least until 2013

Stephan Teuber, vice president of the Federal Association of German Management Consultants, described the move as an opportunity for Siemens to revitalize its tarnished image.

“Siemens has had a very severe austerity policy – one could almost say a restructuring policy – and they were subject to corruption investigation,” he told Deutsche Welle. “They found themselves the targets of severe criticism.”

According to Teuber, it has been known for years that a retirement wave will soon diminish the ranks of engineers and other highly qualified workers in Germany, simply based on statistical ages and university graduation dates. While the recession may have stalled the effect by about a year, intense competition over remaining and new employees is sure to be intense, he said.

“This reduces the chances that people will switch to other employers at the moment,” he said.

But Teuber also foresees a problem with the new contract between Siemens and its employees. Flexibility is called for in a consistently changing market environment, he says. Whether Siemens employees will be willing to relocate or switch to different jobs remains to be seen.

“An employment guarantee isn't a pillow they can just relax on, but of course very secure employment doesn't exactly foster flexibility,” he said.

Author: Gerhard Schneibel
Editor: Susan Houlton

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