News

On July 7^th, IBM UK announced its will to close all the final salary/defined benefit pension schemes from April 2010 in order to save costs during these harsh times. According to Unite’s calculations it means that employees in their mid 50’s could lose up to £200’000 and even more for some. Due to these changes, it is estimated that some 700-1000 IBMers may leave the company by April 2010.



The good news is that hundreds of IBM workers have joined the union since the announcement and there is growing recognition that IBMers in the UK should be organized. A number of open meetings which have attracted large numbers took place since then and other issues like the lack of openness and transparency in the pay system, the lack of pay increase in recent years, forced ranking of performance assessment, quantitative assessment of performance, downgrading of US employees and headcount reduction from the UK workforce have been discussed. The story has even been relayed by the BBC.



UNI launched a request for information on IBM pension scheme to its European affiliates to see whether other countries are being affected. So far the situation is as follows:

Austria

A lot of activities to cut expenses (e.g. reduction of meal allowances, fewer free parking lots for employees, no more support for home working costs related to lease lines) are happening in Austria.

Croatia

By Croatian law employers have the obligation to pay pension and health insurance to employees. But some benefits (company car, free use of mobile phone, paid recreation, systematic health review paid by the firm etc.) are being reduced or cut depending on negotiations with unions.

Belgium

IBM decided to remove two days of holidays from the extra-legal pool and reduced the company car benefit among others. Management also proposed that higher salaries are excluded from the salary indexation scheme while executives got a salary increase of 28%.

Denmark

In Denmark all IBM employees are covered by a portable pension scheme. The IBM plan, though, has been closed for new staff.

In Denmark management has terminated an agreement for company paid internet for all employees as from September 1st 2009. However, there are groups of employees, who are covered by conditions for being available outside normal working hours and a few others, who still enjoy a company paid internet connection.

Germany

Running pension plans cannot be dropped thanks to German legislation, however, the closure will have effects on new hires.

If IBM integrates employees following outsourcing deals or mergers and if those employees are covered by pension schemes, these schemes have to be maintained.

There is a new Total Compensation Concept which is based on statistics and calculations made by consultants. All major IBM competitors are working together to provide necessary data and to share the results. With the Total Compensation Concept, comparison of salaries is no longer based on base salaries only, but includes all cash payments, allowances and benefits. The intention seems to be to turn the various benefits into a cash equivalent and add it to the salary.

Netherlands

In NL the situation is similar to Germany, the pension scheme is still 'alive', but was changed significantly in 2006 (i.e. monthly contribution, limited early retirement options, reduced inflation mechanisms etc) in order to reduce expenses.

Further cuts are for example that IBM home work ADSL lines have now to be paid by employees themselves and some direct support regarding laptop problems are being removed. More cost cutting along this line is under consideration.

Sweden

The pensions are regulated in collective bargaining agreement and thus can’t be changed unilaterally. However other benefits like the allowance for meal tickets are being removed. Also extra holidays given for “round” anniversaries are being scrapped.

It seems that the crisis and increasing competition in the ICT industry is being used by IBM as a pretext to cut down staff costs and do away with benefits. These greedy cost cuttings will certainly not improve IBM’s competitive edge. Saving costs for meal allowances and some extra holidays, though, cannot replace a consistent, innovative business, strategy. Knowledge workers at IBM know that very well. It has an impact on moral and motivation, though, which as a consequence may have an impact on productivity. One thing is sure in these days: more IBM employees will turn to unions in order to have their income and benefits secured through collective agreements.