Vodafone España has informed representatives of its employees that it is putting a collective dismissal plan into action that will affect a maximum of 1,200 workers, 24% of its total workforce in Spain of 5,000 people. The layoffs, news of which was broken by EL PAÍS in November, have been justified by the telecoms giant due to the obligation to reduce costs due to a fall in earnings caused by a continuous reduction of prices.
“In the current market climate, demand for services continues to grow exponentially, but this is not the case with prices,” the company stated in a press release. “Nearly 50% of net new customers are associated with low- or medium-cost offers, something that obliges Vodafone to have a cost structure that is prepared to successfully compete in all segments.”
Vodafone added that the current expectations of clients, “who demand an agile, simple and immediate relationship [with their operator],” is prompting the firm to seek “a more simplified organizational model that strengthens coordination and synergies between teams.”
As such, the company continued, it is looking to “reverse the negative trend of the business, strengthen sustainability, protect our capacity to invest and design a more competitive organization that adapts better to what our customers are asking for.”
The operator says that it is sure it can reach a deal with labor unions so that the measures are as painless as possible. The redundancies will likely take effect at the end of February or the beginning of March.
Vodafone has suffered a great deal in the trade war that was sparked by its rivals Movistar and Orange, after the company opted not to buy the rights for Champions League or La Liga soccer matches on the basis of low returns. The strategy has prompted an exodus of clients from their broadband internet, mobile and pay-TV services.
In the first three quarters of 2018, Vodafone has lost 361,000 cellphone lines (70,000 of which were contracts), 134,000 broadband customers, and 108,000 pay-TV subscriptions. The operator has only seen positive numbers in fiber optic internet, where it has put on 84,000 customers.
The operator executed a similar collective dismissal plan (known in Spanish as an ERE) in 2015, reaching a deal with the main labor unions UGT and STC, and which meant the firing of 1,509 workers – 238 fewer than those initially proposed by the company. Vodafone justified those sackings based on the duplication of roles caused by the purchase of rival operator ONO in 2014, and the absorption of the company’s workforce.
Before the acquisition of ONO, Vodafone also executed an ERE in 2013. On that occasion, the company agreed with unions on the firing of 620 employees, the externalization of services, which affected 130 workers, and changes in the conditions of another 150 people.
English version by Simon Hunter.