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Cyprus

CyTA redundancy scheme could save over €260m

550-600 CyTA employees are expected to leave voluntarily at a cost of just over 100 million euros.

By Angelos Anastasiou

SEMI-STATE telecoms company (CyTA) will save a net €263.5 million from the implementation of the three-year voluntary redundancy scheme, under which 550-600 employees will voluntarily exit the organisation at a cost of €103 million, CyTA president Christos Patsalides said.

Patsalides was addressing yesterday’s session of the House finance committee, which studied the organisation’s request to release €9.5 million from CyTA’s budget to the redundancy scheme.

He said that during the first phase of the scheme, expected to be rolled out in early 2014, which will see a total of 150 employees from various departments go, the option of accepting the scheme would be left to the employees.

During the second year of the plan the organisation will retain the right to choose the employees to be made redundant.

According to Patsalides, the three-year plan is expected to incur total payroll savings of €366.4 million and cost a total of €103 million, including the pension plan expenditure. The organisation expects to recompensate the plan’s cost within 16 months.

Sufficient provisions to fund the implementation will be made in the annual budgets, he told the committee.

A detailed restructuring plan for CyTA, illustrating how the organisation can function effectively given the expected decrease in personnel, will be submitted upon commencement of the second phase of the redundancy plan, Patsalides concluded.

All CyTA employees with at least ten years of service as at the date of the scheme’s announcement are eligible to apply.

Finance Committee chairman Nicolas Papadopoulos acknowledged that the organisation’s administration had adequately clarified some questions raised over the levels of compensation offered under the scheme, and said that “irrespective of privatisation decisions, semi-government organisations must be restructured and consolidated so they can become more productive and competitive.”

He added that “personnel must be incentivised appropriately to exit, and the challenge is to ensure that, despite the compensation cost, the organisation will see a net benefit from the departures.”

CyTA employees’ trade unions issued a memo to parliament yesterday in which they request “an attractive, fair and balanced voluntary exit programme, as has been the case in all telecoms organisations in Europe.”

Referring to the Voluntary Redundancy Scheme submitted to parliament for approval, the memo adds that “this plan takes into account similar plans prepared for other organisations in Cyprus, and the compensation clauses it includes are no better than those offered by loss-incurring or bankrupt private-law organisations.”

“In fact, the compensation terms are lower than those offered by foreign telecoms organisations in similar plans (65 per cent to 85 per cent of employees’ expected income until retirement).”

“Indicatively, in [Greek telecoms] OTE’s latest voluntary redundancy plan in 2013 the average compensation package was €127,000, compared to €75,000 offered in CyTA’s plan,” it added.

The unions clarified that “any amendments to this plan would result either in its rejection by employees, or in its attracting insufficient interest, which would drive the entire effort to spectacular failure with disastrous effects on CyTA and society in general.”

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