Crisis at Italtel: 5,000 jobs at risk

Download article in original language : IT9809179NIT.DOC

In September 1998, Italy's Italtel group announced a cut of 5,000 jobs, due to a crisis of investment in the telecommunications sector. Trade unions strongly oppose the plan, and a harsh conflict seems likely.

On 10 September 1998, Giovanni Barbieri, the managing director of the Italtel telecommunications group, presented to trade union organisations a plan for a reduction of the company's personnel by about 5,000 units. Mr Barbieri described the plan as increasing the value of the company, giving Italtel greater autonomy from traditional clients and enlarging its market, and allowing it to concentrate production activities in its core business.

The workforce reduction should be implemented through selling off a part of the company that at present employs 3,300 workers and the use of "social shock absorbers" (IT9802319F) such as "mobility lists" and early retirement for 600 workers. The remaining 1,100 workers, for whom the use of "social shock absorbers" is not foreseen, run the risk of being made redundant.

The crisis at Italtel was brought about by growing competition with countries that are gaining importance in telecommunications manufacturing and by a fall in internal and external investments in the sector. The economic situation of Italtel, which is owned by Italy's Telecom Italia and the German Siemens, depends on these two stockholders themselves, which constitute its primary clients. The fact that Telecom Italia has not renewed orders worth ITL 340 billion and that Siemens has not renewed orders amounting to ITL 370 billion obliged Italtel's management to announce the restructuring plan, which identifies a surplus of 5,065 workers. The alliance with Siemens should have reduced the importance of Telecom Italia as a client for Italtel, but the difficulties that the German company is facing in the Far East and in western Europe have had negative consequences for Italtel and worsened its economic and employment situation.

The Italtel group is one of Italy's largest producers of telecommunication equipment. Made up of Italtel SpA (about 11,000 workers), Italtel sistemi (2,000), Telesis (130),Tecnoelettronica (350) and Tecnomeccanica (230) the group has more than 14,000 employees. Italtel plants are located in Milan (Lombardy) and in southern regions: L'Aquila (Abruzzo), Santa Maria Capua Vetere (Campania) and Palermo (Sicily). During the last three years, the company has often used "social shock absorbers" to deal with personnel surpluses and temporary crises.

According to the restructuring plan, two plants will be sold: the Santa Maria Capua Vetere facility (about 1,200 workers), which produces energy equipment; and the Castelletto (Milan) plant (2,100 workers), which specialises in the testing, maintenance and installation of communication networks.

Representatives of the sectoral trade unions operating in Italtel - Fim-Cisl, Fiom-Cgil and Uilm-Uil- met on 10 September to discuss the restructuring plan. The unions rejected the company's proposal because they consider the restructuring plan as "a strategy aimed only at reducing costs, and which exposes Italtel to marginalisation". The unions believe that this strategy "brings to the surface the interests of the German stakeholders, who are convinced that Italtel's technological and productive capacity is limited and seek only the acquisition of the company's markets".

The unions question the alliance with Siemens. Giampiero Castano, national secretary of Fiom-Cgil, stated that "the alliance with Siemens is a cage." For the unions, Italtel should sign agreements with other companies so as to be able to keep its production presence across the entire range of telecommunication products.

The conflict between the company and the unions is likely to be harsh and complicated. The unions decided to ask for an immediate meeting with the government and also for the involvement of the Ministry of Industry and the Ministry of Labour in order to address the difficult situation. A meeting between the sectoral unions and company management held on 23 September 1998 confirmed the positions of both parties, who asked for the intervention of the Minister of Industry to settle the conflict.