German Labor Union Ver.di Rejects Deutsche Telekom Offer

BONN -(Dow Jones)- German labor union ver.di Tuesday said it has rejected the latest offer of Deutsche Telekom, following another round of negotiations between the two parties Monday.

Ver.di, which is hosting a media conference in Bonn Tuesday following the failed, 16-hour negotiations Monday, said it was "completely ruling out" reaching an agreement based on Deutsche Telekom's current proposals.

Germany's former telecommunications monopoly said earlier Tuesday that it proposed to forego layoffs at its T-Service division until the end of 2010 in exchange for a gradual wage decrease of 12% over a 30-month period.

Deutsche Telekom plans to transfer 50,000 of its call-center and technical service staff of its fixed-line and wireless units, into new service units.

The plan is central to Deutsche Telekom's aim to cut costs in Germany, where low-cost rivals have been taking business away from the telecoms company at an accelerating pace in recent years.

Deutsche Telekom wants to amend the contracts of part of the transferred staff to include longer working hours and lower wages, arguing that part of the current wages are far above the market average.

But ver.di has opposed the plans. Last week, following several failed rounds of negotiations with Deutsche Telekom, the union started to organize industrial action.

Under German labor law, a company needs the approval of the unions before implementing changes affecting its workforce.

Strike action started last week at Deutsche Telekom, which employs around 160,000 staff in Germany, and is ongoing.

Around 12,000 staff went on strike Tuesday, said ver.di negotiator Lothar Schroeder, in numbers similar to Monday.

Analysts fear that the ongoing issue with ver.di delays Deutsche Telekom's efforts to cut EUR4.7 billion in costs by 2010.

Deutsche Telekom has said that it aims to reach an agreement with ver.di this month, after which it will implement changes effective July.

"I can't imagine that (Deutsche Telekom) is able to stick to this timeframe," said analyst Theo Kitz of private bank Merck Finck. He rates Deutsche Telekom shares at hold.

At 0931 GMT, shares traded down EUR0.13, or 1%, at EUR13.20, on a 0.4% lower benchmark DAX index.

Deutsche Telekom is set to host a media conference in Bonn at 1100 GMT.

Company Web site: http://www.telekom.de

Labor Union site: http://www.verdi.de

-By Joon Knapen and Stefan Mechnig, Dow Jones Newswires; +49-30-28884127; joon.knapen@dowjones.com

(END) Dow Jones Newswires "

Posted to the site on 17th April 2007