Telefónica Spain announced on Friday that it has signed a collective agreement with unions that includes 4,500 job cuts from its more than 21,000 employees.
Spanish newspaper Expansion reported that 4,500 employees are expected to apply for the voluntary retirement plan. Telefónica Spain said the voluntary retirement plan was for employees that reach the age of 53 or more this year, and with more than 15 years of seniority. Those employees can apply to receive 68% of their current salaries until the age of 65 as well as their full social security payments and health insurance.
Telefónica Spain used a similar strategy in 2016 when it took a 2.9 billion euro charge upfront for an early retirement program.
The agreement signed by Telefónica and UGT (General Union of Workers, and CCOO (Workers Commission, will be valid until Dec. 31 2021 and can be extended another year. Employees gained a 1.5% annual salary increase. The agreement also includes an annual bonus of 300 euros in 2020 and 2021, of which 150 euros can be consolidated each year, according to Telefónica.
Telefónica Spain, which has seen its stock price languish, said it was committed to hiring two "young" people for each employee that is forced to retire. Out of those jobs, at least half will be intended for people who are under 35 years of age. Telefónica Spain will fill those jobs through both a university scholarship program and vocational training.
As Telefónica Spain works to reduce the age of its workforce, it will also offer more than 6,000 employees the opportunity to participate in "reskilling" programs for all company employees.
Like other service providers, Telefónica Spain is transitioning from being a legacy telco into a more agile, software-based digital company. Automation has played a role in workforce cuts at companies such as BT and CenturyLink. Telefónica didn't mention the impact of automation in its press release.