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Greece sells telecom stake to pay for pensions

GREECE - The Greek government has agreed to sell 4% of its majority stake in the Hellenic Telecommunication Organization (OTE) to contribute to the voluntary early retirement plan for nearly one third of the firm’s workforce.

The economy and finance ministry confirmed to IPE that the state, which holds 37% of OTE, will foot €290m of the €1.5bn early retirement bill in a bid to solve a long-standing problem relating to job cuts via early retirement.

OTE was floated in 2001 but its 16,000 employees retained civil servant status and the right to a job for life.

The launch of the scheme is expected to pave the way for the reorganization of the company involving the recruitment of more specialised staff.

In a public statement, OTE’s chairman and chief executive Panagis Vourloumis said the company had almost double the headcount required. Staff expenses accounted for 33% of the company’s revenues.

OTE’s management has estimated that around 70% of the eligible 6,000 employees, mainly over 50 years old, could accept the early retirement deal. It would preserve the economic gains that employees would enjoy if they continued to work and keep the original pension promise unchanged.

Departing employees are entitled of two lump sum payments. One is from OTE and the other is from the auxiliary fund as well as full pension immediately upon retirement. OTE’s pension fund would pay the equivalent to 80% of salary and the auxiliary fund 20%.

“In this sense, the voluntary retirement plan is an expensive solution,” Vourloumis said, adding: “There is no other method available.”

OTE is expected to cover the largest part of the expenses through its available funds and the savings arising from the workforce reduction.

The Government’s €290m share sale has come with the obligation to buy the shares back in case the OTE scheme needs cash.

The €1.5bn costs are to be spread across eight years, with the highest expenses due in the first year. The EU is expected to give its approval to the state aid.

Separately, the Federation of Bank Employee Associations (OTOE) has announced a strike on June 7 and 8 over the lack of an agreement with banks and the government over the sector’s intended single auxiliary pension fund.

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