Countdown to finalizing Telefónica’s mandatory salary review for its workforce in Spain. The operator will convene the main unions of the works council to a meeting in the next two weeks to outline this increase which, according to the estimates of the organizations, would be around 7%. This will mean a significant financial effort of several hundred million euros. This improvement becomes effective with effect from January 1 of this year.
In the financial team of the operator in Spain all the alarms had gone off after the summer due to the rise in the CPI between July and September. He had to address a relevant salary review that was burned into the collective agreement renewed after the agreement with the unions. The progressive increase in the index reassured the company. Finally, according to the final data published this Friday, the increase is 5.7%, one tenth less than what had been anticipated. With the figure already on the table, the machinery has been started. Company and unions have taken out the calculator.
The company will convene the Agreement Interpretation and Surveillance Commission in the coming days to define the increase. Predictably, according to the sources of the group itself, the first contact will take place in the week that starts on January 23. In that commission the rise that would be used in the salary tables would be specified. This will be effective from January 1, 2023 Spain, Telefónica Móviles y Soluciones).
In the majority unions they have also taken out the calculator. But they have some estimates about the area in which this increase will move: around 7%, to compensate for this loss of purchasing power accumulated from the year 2019 until the end of 2022. This figure would already include the effect of the two Agreement bonuses collected in October of 300 euros, of which 150 euros are consolidated in wages. This is precisely what complicates the calculations, since it is necessary to analyze the impact of this consolidation on the wage bill, combining it with jumps in salary levels or changes in bienniums. And that data is only held by the company itself.
Specifically, according to these first union estimates, the cumulative increase between 2019 and 2022 has been 5.5%. It is established that the impact of the consolidation of those 150 euros of bonuses would mean around 0.5% more. The cumulative loss of purchasing power is 12.9%. This would cause the adjustment to be around 7%. To this must be added another 1.5% which, according to the same sources, corresponds to the increase in the agreement for the year 2023.
The clause that regulates this salary review is established in article 14 of the collective agreement. The company could get off the hook alleging its economic situation, but that will not be the case. It will mean a significant financial effort for the group. There is not yet an official figure on the table, but it will be several hundred million euros. Faced with this potential scenario, the operator has, among others, two tools to alleviate this rise in costs.
One of those tools is the rate increase that will also be effective this month. The prices of convergent packages increased on average by 6.8%, although the increase in higher value products was double digits. This will give more oxygen to the accounts and try to maintain margins. To this we must also add the ‘record’ tax refund of 1,300 million euros. Of course, like reviewing the CEO before analysts, the objective is to allocate a good part of that money for debt reduction.
The Spanish case is the most paradigmatic, but it is not the only flank that the teleco must cover. In Germany, the increase in 2022 was 3.4% for all employees, along with some private benefits. The negotiation “is pending for 2023 and we expect a reasonable result,” says Vilá. In the United Kingdom, last year it rose 3%. In Brazil and Latin America, “the goal is to be in line with inflation or slightly below.” Because the agreements do not include clauses like the one in the agreement in Spain, the group will try to “negotiate prices below inflation, but the talks are still pending.”
On the other hand, the negotiating table has been set up to provide all the global business units (GBUs in their internal jargon) that are outside the general agreement of the three large subsidiaries with a group agreement that unifies the working conditions of all the companies that are included in this denomination. Among them is the Telefónica SA holding, the digital division or the R&D division. The first meeting was held this Friday. The talks will continue in the coming weeks.
