Leaked plan to slash Telstra jobs


By Jennifer Thompson

July 4 media reports revealed the first concrete information to most Telstra staff, unions and the public of Telstra management's planned job cuts — put at 24,000 — to prepare the company for privatisation. The Communications, Electrical and Plumbing Union responded by demanding that Telstra management and the government honour agreements with the union that there would be "no head count management techniques applied in Telstra".

After the news got out, Telstra management were forced to communicate with staff about their plans for the restructure, beginning with a July 5 memo about "Project Mercury". On July 12, another memo appeared, putting the job cuts for the first year of a three-year corporate plan at 9000. Prior to the July 12 announcement, Green Left Weekly spoke to CEPU Communications Division president Colin Cooper, who was preparing for a round of mass meetings around the country, beginning on July 15.

Cooper said that the union was expecting that Telstra aimed to shed about 24,000 jobs over the next financial year. About 15,000 of them, he said, will be on the basis of contracting and outsourcing, despite the fact that it was not logical. "Telstra management agree with us totally that contracting doesn't necessarily make it cheaper, particularly in the long term, because subcontractors will [initially] give you a cheap price just to get your business."

Cooper confirmed the link between the planned cuts, revealed only after a leak to an ALP member of the Senate inquiry, and Telstra's privatisation. "The government want the numbers down for the privatisation prospectus, and logic is not being applied."

"Telstra management denies that", said Cooper, "but the so-called scoping exercise organised by the Department of Finance using CS First Boston is about getting the numbers down". Leaks to the Financial Review confirmed that, despite Telstra management denials, they were working on a head count basis, with Telstra documents detailing planned staff cuts amounting to 24,000 jobs by July 1998.

CS First Boston's study, recommending extensive job cuts, was delivered to the government after Telstra CEO Frank Blount told a lunch in late June that it was the wrong time in the company's cycle to cut staff. He said that Telstra's equivalent of 86,000 full-time staff was a result of "Telstra's historically high levels of capital investment over the last year or so", while staff productivity had been growing at between 10-12% annually.

Cooper commented that the benchmarks Telstra management were using to determine staffing targets were "totally inappropriate". One was based on US West, a US telecommunications company which works in a very small geographical area compared to Australia. These companies generally don't provide long line services, only a local service. They also don't provide services in their remote areas, Cooper said. "It's usually done via a franchise arrangement, almost with a family business, providing a very poor quality service."

The comparison was also wrong because the big US companies don't go into loss areas, and they are pretty poor service providers compared to Australia's aim to provide a universal service at a uniform cost, said Cooper. "Those companies don't do their own construction and information technology work. There's a lot of in-house work done by Telstra which is not done by those companies." Those factors made the staff numbers per line measure inappropriate, he said, adding that for the other measure of cost per line, after taking into account Australia's geography, "we come up very well".

Amongst the staff facing retrenchment are "administrative staff, so-called back room people who do all the administrative work behind the scenes", said Cooper. "They will be looking at people who provide services to domestic customers: that's lines people, technicians, operators and customer sales reps — an area of this so-called first phone obligation." This is a very important service to Telstra, but it doesn't make a lot of money, said Cooper.

Much work would be contracted out, he said. This would include work done by line staff, installing cable, a lot of construction work, work for the mobile phone network installation, management of properties and looking after the air conditioning and power rooms.

For the remaining staff, Telstra management was also trying to introduce an individual performance-based pay system, said Cooper, "but traditionally our union has opposed that. We believe the pay system should be a collective pay system and a paid rates system where everyone knows what they are going to get and can generally get annual increments up to their maximum rate."

The performance-based pay system really means taking away some of the person's pay now and putting certain criteria to them before they get their normal rate of pay, he said, adding that strong opposition by the union meant management hadn't got much of it introduced in Telstra.

In the face of the privatisation and job cuts, there had been "good cooperation between the Telstra unions and even within the union itself. There's a lot more unity", said Cooper. "Everyone realises the seriousness of the situation." n