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Business

Siemens, Telekom Test Friendlier System for Shedding Workers

Siemens and Deutsche Telekom are planning massive job cuts in the coming years. To circumnavigate Germany's strict employee protection laws and tough unions, the two giants are testing a new idea.

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Siemens wants to steer many of its employees into its in-house agency

Two of Germany’s biggest employers are turning to in-house employment agencies to help unions swallow massive job cuts in the coming years.

Deutsche Telekom plans higher-than-anticipated cuts of up to 50,000 jobs worldwide, 80 percent of them in Germany. Siemens AG said it plans to cut 6,000 jobs in Germany, part of 17,000 cuts worldwide.

With unemployment remaining steady at four million, the two German giants are facing stiff union opposition and will have to navigate a German employee protection law that makes dismissal extremely difficult.

In response, the two announced this week they plan to divert most of their unemployed to in-house employment agencies (Personal Service Agencies) that will re-train them for other jobs within the companies or help them get work outside. The plans will affect up to 16,800 employees at Telekom and around 2,000 at Siemens, mostly in their trouble-laden Information and Communications Network (ICN).

“We are still in negotiations so this is very tentative,” a Siemens AG spokesman told DW-WORLD.

Keeping their salaries while looking for a job

But he said guidelines for such a plan have already been discussed. The employee would earn a full-year's salary while being retrained by Siemens, said the spokesman. Telekom, which introduced its PSA plan last year, pays the employees salary for up to three years, said a union spokesman.

The employment agencies have been a buzzword in Germany ever since Chancellor Gerhard Schröder proposed introducing such a plan on a nationwide level this past summer. The proposal was criticized by industry and opposition parties as a weak solution to Germany’s labor market problems.

Unions, however, have greeted Schröder's idea and have similar praise for Telekom and Siemens said.

"Of course, we would like them to keep their jobs," Hermann Zoller, spokesman for the union Ver.di. "But we’re very pleased with this accomplishment."

Hustling to turn it around

Both companies are in a rush to right sinking ships. The ICN wing of Siemens, which sets up networks for companies, has been suffering of late, reporting a 461 million euro loss during the first nine months of this year.

Meanwhile, Telekom is in the middle of a massive savings package. Interim CEO Hemlut Sihler wants to reduce the company’s 65 billion euro debt to 50 billion by the end of the year.

The CEO laid out a plan in August that saw cuts in the company’s advertising budget and envisioned job reductions of up to 22,000 in Germany alone. Worldwide the company employs close to 260,000 people, of which 40,000 are now expected to lose their jobs.

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