Restructuring at T-Systems tests unions' ability to cooperate

In September 2002, T-Systems, a German service provider in telecommunications and information technology, announced that 6,500 of its 43,000-strong workforce could lose their jobs as part of a restructuring plan. Developments at T-Systems are particularly interesting because it is one of the rare cases in Germany where two trade unions have organising responsibility for the same company. The situation will test the unions' ability to cooperate in both fighting the impending job losses and clarifying and unifying their own responsibilities.

In Germany, it is usually the case that one trade union is responsible for organising in each company, but because of mergers or expansion into new markets this principle has been breached in some companies. T-Systems, a German-based service provider in information technology and telecommunications, is one such example, with two unions responsible for the company. On 16 September 2002, Christian A Hufnagl, the chair of the T-Systems management board, announced that up to 6,500 of the firm's 43,000 employees could lose their jobs, and that a cost-cutting programme was being initiated. In view of the impending job losses, the situation at T-Systems will show if the two cooperating trade unions can deal with their overlapping responsibilities.

One of the core elements of the organisational structure of German trade unions is a sectoral division of responsibility, which means that only one union is responsible for each sector’s employees and companies, in order to avoid competition between unions. Furthermore, for each sector only one union negotiates the collective agreement. In recent years, however, the growth of telecommunications and information technology has undermined these principles, because companies in 'traditional' sectors have expanded into these new growth markets, questioning the traditional demarcations. In November 2000, the German Federation of Trade Unions (Deutscher Gewerkschaftsbund, DGB) issued guidelines in order to clarify the responsibility for organising companies amongst its affiliates, but nevertheless some cases of overlapping responsibilities still exist (DE0012297F).

T-Systems was formed by Deutsche Telekom by bringing together its own telecommunications and information technology service division, DeTeSystem, and debis Systemhaus, a service division bought from DaimlerChrysler, the German/US motor manufacturer. In March 2000, Deutsche Telekom took over the majority holding in debis and in January 2002 it bought the last stake from DaimlerChrysler. The merger is still uncompleted but the restructuring and integration is expected to be completed by the end of 2002.

In the past, trade union responsibility for debis, as it belonged to DaimlerChrysler, was assigned to the Metalworkers' Trade Union (Industriegewerkschaft Metall, IG Metall). DeTeSystem was a telecommunications concern and as such fell under the auspices of the Postal Workers' Union (Deutsche Postgewerkschaft, DPG) which merged with four other trade unions (DE0104220F) in 2001 to become the Unified Service Sector Union (Vereinte Dienstleistungsgewerkschaft, ver.di). Some collective agreements for the old debis divisions were concluded by IG Metall, others by ver.di. The group works council is given support by both IG Metall and ver.di, although ver.di wants to have the sole responsibility for T-Systems.

Currently the trade unions’ ability to cooperate and to handle the responsibility of dual responsibility in one company is being particularly challenged by the fact that the previously booming telecommunications and information technology industry is under pressure.

There are several reasons for T-Systems' current troubles. First, T-Systems was intended to operate in a growing market and become a 'cash cow' for its parent company, Deutsche Telekom, but growth has now slowed down. Second, a change at the head of Deutsche Telekom has brought cost cutting to the whole group, which has debts of EUR 64 billion. The new chair of Deutsche Telekom's management board, Helmut Siehler, aims to reduce these debts as quickly as possible and holds all divisions liable for this. Third, the restructuring and integration of T-Systems has not been completed and differences in corporate culture and overcapacities still exist.

At the moment, the work councils at T-Systems are trying to obtain further information on job losses from the management, and ver.di is demanding negotiations on a rationalisation plan with social and employment guarantees, as exist at the parent company, Deutsche Telekom. In the past, IG Metall and ver.di have not agreed on all issues. In particular the question of how to merge T-Systems has been under debate, because this would decide whether IG Metall’s or ver.di’s collective agreement would have priority in the merged company. Given the impending job losses, the two unions will probably postpone possible conflicts. If the merger is completed by the end of 2002, only one trade union can retain responsibility for T-Systems.