Tech Job Watch Apr 27 2011

Nokia Layoffs are Sweet Deal for Affected Workers

By joseph walker

Nokia's announced plan to cut a billion euros in costs by laying off 4,000 workers in its native Finland, along with Denmark and the U.K. isn't as simple as handing out pink slips.

The mobile phone company said it has begun negotiations with its various unions, the Federation of Professional and Managerial Employees and The Pro Union, for instance, on severance plans and that affected employees can stay on the payroll until the end of this year while they plan their future. Exact severance packages will vary by country and union contract.

What's clear is that terms will be generous, at least by American standards. They could cost the company as much as a billion euros -- same as its costs savings, analysts said.

High-level employees could receive as much as 120,000 euro, while lower-level employees would receive cash roughly in line with their current annual salary, said Pierre Ferragu, a Nokia analyst at Sanford C. Bernstein & Co. Most workers will receive a significant cash sum, re-training and job placement assistance.

"We will offer career counseling to help employees find work outside of Nokia, and help link employees directly with local companies. In addition, employees will receive a financial package in accordance with local practices," said Nokia spokeswoman Kendra Petrone in an email.

Besides cash and job placement, Nokia is launching a venture fund. to promote entrepreneurship among the laid-off employees. "The fund will offer training, funding opportunities, and help identifying business opportunities and partnerships for employees who want to start a new business of their own," Petrone said in an email. She declined to say how much money will be in the fund.

Other companies are likely to try to recruit Nokia's skilled laid-off workers. Earlier this month, Intel announced plans to open a research and development site in Finland that would employ at least 200 workers. If an ex-Nokia employee does land a new job, they could also still receive a cash settlement from their old employer, said some experts.

"When you hear there might be a layoff at your company [in Europe], you think, 'That's a good thing,' because it's a good way to get a lump sum and get a better job," Ferragu said.

In an email, an Intel spokeswoman said: "We do have hiring recs open for talented software developers and hardware engineers around the world, including Finland. Some of the people who have seen those hiring recs and decided to apply for them may have worked at Nokia."

A Reuters report said that both Google and Skype have expressed a desire to hire laid-off Nokia workers. Google declined to comment, and Skype did not immediately respond to a request for comment.

About 30% of employees in the European Union are unionized, said Roland Erne, a visiting fellow in international and comparative labor at Cornell University. However, an EU directive requires companies engaging in sizable layoffs to negotiate the terms of dismissal with employees regardless of whether they belong to a union or not.

Nordic countries like Finland -- which has a 74% unionization rate, compared to 12% in the U.S. -- also have strict labor laws that are favorable to unions, said Erne, the author of the book "European Unions: Labor's Quest for a Transnational Democracy."

In Europe, "the company can not just unilaterally slash staff numbers and walk away. They have to offer something in exchange for labor approval of their plan," Erne said. Some multinationals in Europe have their own staffing agencies that help find jobs for laid-off workers, while others outsource the job placement to third party firms.

It's unclear how long negotiations between Nokia and the two major unions representing affected workers will take. Nokia would not specify a breakdown of what sectors or countries the laid-off workers will come from. Nokia's restructuring also includes the transfer of the software side of its Symbian smartphone operating system to Accenture, along with the unit's 3,000 workers.

Write to Joseph Walker

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