Deutsche Telekom and trade union Verdi reached a deal on Wednesday that lets the company slash costs by moving 50,000 staff into new lower-paying service units, ending weeks of bitter stand-off.
Deutsche Telekom's head of personnel, Thomas Sattelberger, said the agreement allowed it to reach its cost-saving targets, which Deutsche Telekom has said were 500 million to 900 million euros ($671 million-$1.21 billion) in 2010.
The move is a key element of Chief Executive Rene Obermann's strategy to improve Deutsche Telekom's competitiveness and is expected to boost confidence in company management.
Verdi agreed to a 6.5-percent cut in compensation and an increase in the work week by four hours to 38 for the staff affected. In turn, Deutsche Telekom agreed to make one-off payments and pledged to guarantee jobs until 2012. Deutsche Telekom also promised it would not consider a sale of the three new units, called T-Service, until the end of 2010.
The pay cut was one of the main sticking points in negotiations that resumed last week after collapsing in May, when Verdi rejected management's proposals and started the first major strike at the company in more than a decade.
Verdi formally approved the agreement with an overwhelming majority, chief union negotiator Lothar Schroeder said. Employees will be asked to vote on an end to the strike next week, he added. The walkout, which was scaled down once talks resumed last week, will be reduced further. The agreement is a first success for Obermann, who has promised to win customers back with better service and prices echoing promises his predecessors have made yet failed to keep.