Telekom Reaches Deal

The service sector union Ver.di agreed to wage cuts and longer hours in return for a job guarantee until 2012, spokesmen for the two sides said after talks near the former West German capital of Bonn.

Strike action launched by the union on May 11 to protest the outsourcing plans would end on Friday, a union spokesman said.

Tens of thousands of the company's 160,000 employees in Germany took part in the strikes, the biggest labor dispute involving the company since it was privatized 12 years ago.

Drop in earnings

Telekom plans to outsource the workers into three lower-paying service companies in a bid to boost earnings and competitiveness in the face of fierce competition in its domestic German market.

Last month, the former state monopoly reported a 58-per-cent drop in first-quarter earnings, largely as a result of a slump in its fixed-line operations in Germany.

Under the deal agreed on Wednesday, the workers transferred to the new companies will receive a 6.5 cut in pay and see their working week increased by four hours to 38 hours.

Telekom had initially sought a 9 percent pay cut and a six-hour increase in the working week in order to achieve savings of up to 900 million euros ($1.2 billion).

Ver.di said it would ballot its members on the deal next week.