Job losses plague open UK telecoms sector

Date: 25/04/1996

By Michael Mann

THE combined effects of liberalisation and technological changes have brought unprecedented job cuts in the UK's telecoms sector, generally regarded as one of the EU's most open markets.

In the five years leading up to 1995, the number of staff employed by the country's largest operator (and former state monopoly) - British Telecom - fell from 231,523 to 132,351.

Between March 1985 and March 1995, BT shed 12&percent; of its management staff, 42&percent; of engineers, 89&percent; of operators and 15&percent; of office grades - an overall average of 44&percent;, even though the number of clerical jobs in sales and marketing has apparently grown.

In 1995 alone, BT's largest competitor Mercury made a third of its staff redundant as it assigned non-core business to foreign operators.

The Communication Workers' Union (CWU) and the Society of Telecoms Executives reject BT claims that an expansion in related industries such as cable television has created as many jobs as have been lost in the telephone sector over the past decade.

In a survey conducted last year, BT claimed that less than one in five of those made redundant in 1992 and 1993 were still seeking work. But the unions estimate that no more than 30,000 jobs have been created in related sectors.

While a combination of factors are doubtless to blame for the situation, CWU believes that technological change is the “most powerful and sustained” reason, although the timing of job losses has been influenced by the liberalisation of the British market.

It says BT's privatisation in 1984 changed the firm's culture, encouraging it to distinguish between core and non-core activities and contract out a number of activities. It also, says the union, began “an immediate drive to reduce staff numbers without any real assessment of the impact on quality of service”.

Competition was initially introduced with the decision in 1983 to license Mercury. Full competition means that BT is now faced with about 150 network competitors, which are able to start from scratch with advanced technology and low staffing numbers.

Further pressure has been put on the dominant operator by price caps imposed by the government, forcing it to reduce prices by around 4.5&percent; or 595 million ecu every year.

Even without these imposed developments, the union accepts that BT would have been forced to reduce staffing levels because of major investments in new technology averaging 3-3.6 billion ecu every year. With the full liberalisation of the EU telecommunications market now less than two years away, the European Commission is overseeing studies in the UK, Germany, France and Sweden into the consequences of deregulation for employment, in the hope of building some sort of predictive model for the future.