Staff aged over 53 can stay home on 68% salary, says Telefónica

The Spanish telecoms group Telefónica has come up with a novel way of reducing its wage bill by offering employees aged over 53 the chance to stay at home on 68% of their salary.

Under a new deal negotiated with trade unions, any employee over 53 with 15 years of service will continue to receive slightly more than two thirds of their salary if they do not come in to work. They will remain under contract and the company will continue to pay their social security and private health contributions until they reach 65, thus saving the state the burden of further unemployment benefits.

Under the voluntary scheme, anyone who joins it is free to return to full-time work.

Telefónica has about 28,000 employees in Spain – 21,000 in the landline business, 6,000 in mobiles and 1,000 in Soluciones, its infrastructure unit. The company estimates that 7,000 people are eligible for the scheme, which runs until the end of next year.

From next year, the scheme is expected to save €370m (£281m) a year, the company says, adding that the measure is part of the plan to “transform and simplify” the business.

The plan was agreed within a broader agreement on pay and conditions that Telefónica reached with the union last July. The company has set a target of reducing debt to just under €32bn after reporting borrowings of nearly €50bn last year . Some of this will come from the sale of its British mobile business, 02. There is also talk of an initial public offering of the Soluciones unit.

Telefónica is Spain’s equivalent of BT, a former state-owned monopoly telecoms supplier, but liberalisation of the sector has transformed its fortunes. It has been slow to respond to competition and, for several years, has been haemorrhaging mobile clients to its two main competitors, Orange and Vodafone, as well as Yoigo.

However, Telefónica still retains the lion’s share of the Spanish mobile market which, with more than 50 million subscribers, is one of Europe’s largest. It also controls 91% of the valuable fibre-optic broadband market.

Over the past year, the battleground has shifted to football on TV, with the three main operators – Telefónica, Vodafone and Orange – vying for customers with offers of packages of national and international matches. Last autumn, Telefónica offered subscribers a package that included all Spanish league and cup matches.

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