[cellular news] Telefonica has said that plans to cut 6,500 jobs from its main Spanish division will cost around EUR2.7 billion (US$3.8 billion) before taxes, but that the arrangement will be cash positive from the first year.
The company has announced the job cuts, equivalent to around 20% of the company's Spanish workforce due to the sharp downturn in the Spanish economy as well as increased competition in Spain's landline market.
The cost of the redundancies averages EUR415,000 per employee will be booked as a non-recurring increased labor cost, Telefonica said in a filing with the stock market.
The company has reached an agreement with the unions over the redundancy costs, which include 45 days wages for every year of employment, in addition to some voluntary grants. The former state-owned company is also picking up the cost of unemployment costs that would normally be covered by the State.
The redundancies have been criticized by Spain's politicians, coming at a time when the country's unemployment rate is over 20%.
Telefonica Says Redundancy Plans to Cost $3.8 Billion