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Business

Telekom Says Its Civil Servants Are Over-Protected

In an interview with Handelsblatt, Deutsche Telekom’s personnel chief slammed the German government for not giving the company more room to manoeuvre on personnel policy in relation to its remaining state employees.

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Busy line? - Telekom says the German government isn't listening to its pleas for changes in personnel policies

The telecommunications giant, which is seeking to accelerate cost-cutting in the wake of former chief executive Ron Sommer's departure, said the government has done nothing to introduce greater flexibility to the conditions of service for the company's 53,000 civil servants.

"We have made repeated attempts to convince the government that current restrictions must be loosened, but all we encounter are misgivings because this would give rise to a need for special regulations," said Deutsche Telekom's personnel chief Heinz Klinkhammer.

The state-employed civil servants of Deutsche Telekom, a formerly state-owned company, still enjoy a high measure of job security. They are protected from layoffs and are guarded from company-imposed changes to their job descriptions and pay. These rules are not compatible with a telecom company's need to remain flexible, according to Mr. Klinkhammer.

A year ago, the company reached a wage agreement with Germany's service union, Verdi, on new performance-based pay guidelines for its other 68,000 employees. Mr. Sommer's interim successor, Helmut Sihler, has said he plans to step up efforts to reduce the company's debt burden.

In addition to cutting a further 40,000 jobs and creating 8,000 new ones by 2005, the moves include cutting costs by one billion euro a year by reducing investment in both mobile-phone and hard-line services as well as cutting back expenses for advertising and consulting, according to people close to the company.

In personnel, further cost-cutting has now hit a wall of regulation, according to Mr. Klinkhammer "We’ve now done everything we're currently able to do," he said.

But Frank Rothauge, an analyst at Bankhaus Sal. Oppenheim, said the company's options are not yet exhausted. "The company needs to examine more carefully whether it can replace some of its employees in its administrative and controlling subsidiaries with civil servants from the parent company," he said.

Deutsche Telekom has already drawn up a plan to move 7,000 of its non-state employees into a new training and employment agency set up by the company. The aim is to save money by replacing temporary employees from outside agencies with the company's own employees.

The company plans to launch the new unit as early as this month. Another possible route for civil-servant reduction may lie in the 1995 privatization law, which allowed postal employees the option of switching their status from that of civil servant to company employee for a limited time.

According to the law, if the company does not subsequently offer the employees a new civil service position, the state is obligated to pick up the tab for their early retirement. The new wage agreement could make a switch to employee status more desirable for the company's civil servants.

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