World Employment Report 2001

Negotiating the new economy: The effect of ICT on industrial relations

3. An industry in transition: The example of the telecoms sector

It is time to narrow the focus, to look at developments in industrial relations in a particular sector. The telecoms industry is a suitable candidate on several counts. It puts the ‘C’ in ICT; or, in other words, it comprises one half of the two strands of information and communication technology. It is one of the sectors driving the new economy. It is also one of the sectors most directly affected by globalisation.

The telecoms industry has in recent years gone through a profound process of restructuring. Only a few years ago the majority of telecoms operators were publicly-owned monopolies delivering little more than standard voice telephony. Now many privatised or partly privatised state corporations are competing for business in a fast changing environment. In some countries, data communication comprises a larger share of traffic than voice telephony.

As a result, recent years have seen radical transformation also in terms of employment. Where once telecoms workers could have taken comfort from the security of working in a stable, slow-moving state-owned concern, now they may find themselves in a highly volatile commercial business environment.

The telecoms sector has historically seen high levels of trade union organisation. The Table 6 compares, for selected countries, actual union membership with total potential membership in the sector in 1992, or in other words just about at the stage when the industry was entering into transition in many countries. (Some caution is needed in interpreting these figures, which are taken from returns submitted by affiliated unions to the international trade union federation PTTI, now UNI, and which cannot be independently validated. The apparent density rate in the Czech Republic of more than 100% may be the result of maintaining retired employees as union members).13

Table 6: Actual union membership and total potential membership at the stage when an  industry was entering into transition in many countries.

Country and trade union

Actual trade union membership

Potential membership

Union density rate

Argentina, FOEESITRA (1996)




Australia, CEPU




Czech Rep, UCW




Egypt, GTUCW




Hungary, MATASZ




Ireland, CWU (incl postal wkers)








Lithuania, LCWTU




Malaysia, NUTE (1996)




Morocco, UMT




Netherlands, ABVAKABO








Slovakia, OZS




Sweden, SEKO




Taiwan, CTWU








Source: PTTI (now UNI).

A symbolic start date for the process of transformation in the telecoms sector is perhaps January 1st 1984, when the former near-monopoly company in the US, AT&T, was dismantled and the seven regional Bell operating companies established. Also in 1984 the British government began the process which led to the privatisation of British Telecom and the opening of the UK telecoms market to competition. The Japanese telecom company Nippon Telegraph and Telephone was partially privatised in 1985. Korea Telecom was privatised in 1982.

What has become a global wave of telecom liberalisation grew rapidly thereafter. One significant milestone was a European Union directive requiring member states to open voice telephony services and infrastructure to competition from 1998 (a small number of EU states were permitted to delay this measure). On 15 February 1997, an agreement signed by 68 states under the auspices of the World Trade Organisation effectively opened the door to complete liberalisation and globalisation of the telecoms industry. The 68 states together account for more than 90% of the total turnover of the industry.

This process of telecom liberalisation has been accompanied by sometimes sharp reductions in employment levels. For example:14

  • Australia: employment in Telstra fell from 94,000 in 1986 to 68,000 in July 1996, with the company planning for a further fall to 37,000 by the start of 2000 [a]
  • France: employment in France Télécom rose until about 1994, but has since fallen, from 157,000 in 1994 to 143,000 in Jan 1999.[b]
  • Germany: employment in Deutsche Telekom fell from 233,100 in 1993 to 191,034 in 1997 and to 172,000 in 1999 [c,d]
  • Greece: employment levels at OTE fell from 26,140 to 21,195 in 1998 [e]
  • Hungary: employment in Matav fell from 18,998 in 1993 to 14,950 in 1997 [f]
  • Romania: employment levels at Rom Telecom fell from 55,300 in 1994 to 49,000 in 1998 [g]
  • Czech Republic: employment in SPT Telecom fell from 25,429 in 1994 to 22,277 in 1998 [h]
  • Switzerland: employment cuts in Swisscom are expected from 22,000 in 1997 to 18,000 by 2001. [i]
  • Ireland: employment levels at Telecom Eireann (now Eircom) fell from 15,000 in 1994 to 11,000 in 1998 [j]
  • Italy: employment levels at Telecom Italia SpA fell from 104,000 in 1994 to 81,000 in 1998 [k]
  • Spain: domestic employment in Telefónica fell from 72,000 in 1994 to 55,000 at the end of 1998 [l]
  • Sweden: employment levels in Telia fell from 49,000 in 1993 to 32,000 in 1997 [m]
  • Japan: employment in NTT was 300,000 in 1985 and 216,000 in 1993 [a]
  • UK: employment in BT fell from 241,124 in 1984 to 132,351 in 1995 and 116,493 in 1998. At the peak of its downsizing exercise, the financial year 1992/3, the company shed 31,115 posts. [n]
  • USA: the overall workforce employed in the sector fell from 965,000 in 1983 to 872,000 in 1992. AT&T shed more than half its unionised employees during the 1984-1992 period [a]

In an industry which has been undergoing the sort of changes which can see more than 20,000 people leaving a single company’s employment on a single day (as happened in the case of British Telecom), one might predict that industrial relations would enter a meltdown situation.

In fact, this has in general not been the case. It is true that in many parts of the world trade unions have fought bitterly against telecoms liberalisation and privatisation at the time when the proposals have first been advanced. This was the case in the early 1980s (for example, at the time of the first privatisation of British Telecom), and it is still the case today. In Costa Rica, for example, the year 2000 started with a major strike against government proposals to remove the monopoly from the state telecoms company ICE.15 Other examples of union mobilisation against telecoms liberalisation have taken place in Mexico, India, Ghana, South Africa, and Norway, among many others.16

In a report prepared for an ILO tripartite meeting on the postal and telecoms sectors in 1998 the following assessment was offered:

"In the communications sector, labour relations as a whole have deteriorated in the 1990s as a result of the structural and regulatory changes brought about by liberalization, privatisation and globalization. Employees and their trade unions, accustomed to the stability of the public sector monopoly or of a private sector in which competition was distorted by the regional division of markets and entry barriers, have reacted rather negatively to the reorganizations and job suppressions."17

It is also true, however, that once the process of structural reform has been commenced collective bargaining processes have generally continued to function, often with perhaps surprising facility.

Among the large telecoms players, the shedding of jobs has largely been undertaken without compulsory redundancies. In Germany, for example the German postal workers union DPG obtained such a commitment from Deutsche Telekom in 1995 as part of the country’s Alliance for Jobs initiative. The agreement, initially until 1997, was later extended.

In Japan, the reduction in overall employment at NTT, the world’s largest telecoms company, has also been successfully achieved by collective agreement. NTT set up a joint consultation mechanism on employment, conditions of work and management.18

Compulsory redundancies have also to date been avoided at British Telecom. At BT, as also with NTT, Bell Canada, Belgacom in Belgium, Deutsche Telekom and Telenor in Norway early retirement has played an important part in reducing staff size.19 The advantage in each case to the company concerned is that the average age of the workforce is reduced; younger staff are also less expensive than their older colleagues.

In Germany, the DPG has for the past two years ensured that the collective agreement with Deutsche Telekom includes provision for young trainees to enter employment with the company. Deutsche Telekom undertook during 2000 to employ on full-time open-ended contracts all trainees who successfully completed their training programme. The company also offered 2,600 places for new trainees.20

At the European regional level, the machinery of social partnership also appears to be functioning smoothly. In March 2000 the telecoms employers and trade unions jointly submitted a statement for the EU Lisbon summit, called among other things to address the issue of Europe’s progress to an information society. The joint statement stressed the importance of the telecoms sector for economic growth in the EU and stated that training and the modernisation of work organisation were two key elements to the sector’s development. The statement ended as follows, with a commitment from both sides to ensure that:

  • Before the end of 2001 all employees in our companies have the opportunity to raise their awareness of information technologies and receive essential ICT training.
  • IT skills are developed and made portable by means of appropriate certification arrangements which are recognised across Europe.
  • A European strategy is developed to utilise Internet based ICT training within the sector, leading to certified and portable qualifications for all employees.
  • During the current and coming year (2000 and 2001) they will develop a set of voluntary Europe-wide guidelines for telework.21

It is fair to say, however, that there are a number of particular industrial relations issues which have arisen as a result of the liberalisation process in the telecoms sector. The first of these concerns civil service status, which (as employees of state-controlled enterprises) many telecoms workers traditionally enjoyed. This issue was the focus of trade union attention in France, where 90% of France Télécom’s employees have civil service status and as a result have protection from dismissal. The unions have so far successfully protected the status of these workers.

In Germany, staff employed since 1995 have been taken on as private sector staff. However existing staff have been given the chance to maintain civil service status. In Denmark, TeleDanmark staff have also retained this status. However this is not the case in other countries, including BT in Britain, Telia in Sweden and the telecoms company OPT in Benin.22

Civil service status offers job protection and good employment rights, but can mean that trade union rights are restricted. As part of the liberalisation process of telecoms in Japan, staff of NTT gained the right to strike.23

A second issue concerns the nature of union representation and industrial relations in the powerful new telecoms companies. International and British trade union bodies lobbied against the proposed MCI/BT merger, concerned that MCI did not share the same traditions of collective bargaining or union recognition as BT. UNI also lobbied strongly at the European Commission against the proposed MCI Worldcom/Sprint merger, accusing both companies of engaging in anti-union activities.

More recently the Communications Workers of America took strike action in August 2000 at Verizon, a company formed by the merger of Bell Atlantic and GTE. The industrial action, successfully resolved after about two weeks, had among its aims the right to recognition of the union in new areas of the company’s business, in particular Verizon Wireless.24