German union: Shun HP pay-cut plan

A German union is encouraging Hewlett-Packard employees not to go along with a voluntary cost-cutting plan that asks them to take a pay cut or forfeit vacation days.

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A German union is encouraging Hewlett-Packard employees not to go along with a voluntary cost-cutting plan that asks them to take a pay cut or forfeit vacation days.

HP announced a program in June under which workers could take a 10 percent pay cut through the end of October, take eight days of vacation, or take a 5 percent cut and four days of vacation. But the program was optional: Employees could chose anonymously to keep their full pay and vacation benefits without any repercussions, said spokeswoman Suzette Stephens.

Recommending against the plan is one union, IG Metall in the Baden-Wuerttemberg region. HP has its German headquarters there, in Boeblingen, and computer factories in Herrenberg. The union argues that a pay cut for HP workers could spill over to affect union members employed by other computer makers, according to Ulrich Oexle, director of the Workers' Council for HP's German employees.

German Workers' Councils, separate from unions, are government-mandated groups that represent employees in negotiations with management. The HP council took a neutral position on what employees should do, Oexle said. HP was required by German law to work with the council when creating the plan.

HP acknowledges there has been some debate about the cost-cutting plan but argues that its employees are represented chiefly by the Workers' Council, not by unions such as IG Metall.

"Only about 2 percent of HP Germany employees belong to trade unions, and our primary responsibility is to our own HP Workers' Council," said spokeswoman Rebeca Robboy.

Labor movements in Europe are more influential than in the United States, and European companies generally must be more sensitive to labor concerns.

HP, based in Palo Alto, Calif., has for decades said its employees are its greatest asset. Its current plan to cut costs is intended to be a less drastic alternative to the rounds of layoffs being made by companies such as Compaq Computer and Dell Computer. HP has already laid off thousands this year but hopes to avoid further cuts.

The company's cost-saving program is being implemented worldwide, with regional variations according to country-specific labor laws. Where U.S. workers were given the option of actually taking four or eight vacation days off, German employees choosing a similar option had four or eight vacation days removed from the total they'd accrued.

HP has about 90,000 employees worldwide, 45,000 of them in the United States, with 20,000 in California, Robboy said. Of the total internationally , tens of thousands have signed up for one of the first three cost-cutting options, the ones that require vacation days or pay cuts, she said.

One source familiar with the plan said 61,000 of HP's employees so far had signed up for one of the first three options. Stephens said that of the respondents so far, 97 percent had opted for one of the first three options.

German employees have until July 13 to decide what to do, Robboy said.