This Monday, Telefónica management will inform the most representative unions (UGT, CC OO and Sumados-Fetico) of its intention to create a new work regulation file (ERE). The objective is to reduce costs and improve efficiency in compliance with the new 2026-2030 Strategic Plan, which is committed to financial discipline. But the adjustment also has a political drift because it occurs in a company in which the State is the main shareholder. These are the keys to understanding the operation.
Affectation. The initial number of departures is estimated at between 6,000 and 7,000 workers – between 24% and 28% of the total workforce in Spain – although this number will be significantly reduced during the negotiations, as happened in the ERE 2024, which went from 5,124 in the initial proposal to the 3,421 workers ultimately affected. Unlike this adjustment, the current one will not only affect the three main subsidiaries – Telefónica España, Móviles y Soluciones – which are under the protection of the Contract of Related Companies (CEV), but also the Movistar+ television, the Telefónica Global Solutions and Telefónica Innovación Digital subsidiaries, and the corporate center.
Calendar. The company wants a quick process to apply ERE costs to the current fiscal year’s accounts. The procedure will begin this Monday with the communication of the adjustment to the inter-centre committees of each of the seven divisions involved. Spanish labor legislation establishes a strict timetable: the company has 15 days from this communication to form the negotiating table. Once established, management and employee representatives will have an additional 30 days to negotiate both the final number of layoffs and the financial terms of the departures. If the maximum deadlines are exhausted – a month and a half in total – the signing of the agreement could reach the goal in time, either by December 31, 2025, or in early January 2026.
Negotiation. The ERE will be negotiated by the majority unions UGT, CC OO and Sumados-Fetico, who have already signed the 2024 agreement. The climate of consensus is total both among the unions and with the company management, a climate of understanding that was consolidated with the signing of the first corporate social framework last October. This important prior agreement has succeeded in unifying the rights and commitments of the entire Spanish workforce, regardless of each worker’s specific agreement.
Conditions. The unions’ top priority is to improve economic exit conditions to match or improve those of the 2024 ERE, with voluntary redundancies and early retirements. On that occasion the requirements to access the plan were to be at least 56 years old and to have been in the company for 15 years. The pay was structured by age group: workers aged 56 received 68% of the regulatory pay up to the age of 63 and 38% up to the age of 65; For those born between 1964 and 1967 the remuneration was equal to 62% of the salary up to the age of 63 and 34% up to the age of 65, in addition to a bonus of 10,000 euros for voluntary registration. Workers born in 1963 or earlier received 52% of salary until age 63 and 34% until age 65, along with the same voluntary bonus. Furthermore, the agreement provided coverage such as the payment of the employee’s social security contributions during unemployment and collective insurance up to the age of 63 (or up to 65 in case of survival).
Cost. Telefónica set aside around 1.3 billion euros (before tax) to cover the cost of the 3,421 departures in 2024, which represented an expense of around 380,000 euros per employee. With the same scope, the new ERE can skyrocket spending up to 2,000 million. However, the entire outlay is borne by Telefónica. And although the State initially bears the social costs resulting from layoffs (such as unemployment benefits and social security contributions until retirement), this impact is offset by the so-called “telephone clause”, legislated precisely because of a massive ERE in the operator in 2011. This clause obliges large companies that carry out collective layoffs with older workers (over 50 years of age) and with substantial economic benefits to reinstate part or all of the cost of unemployment benefits and contributions (Special Agreement with Social Security) to avoid them falling entirely on the State.
Impact on accounts. The design of the adjustment will be very similar to the one applied in the last ERE. Then, on December 4, 2023, the company announced an adjustment for 5,124 workers, and after less than a month of negotiations, the ERE was signed on January 4, 2024, improving initial conditions and reducing departures to 3,421. The cost of the practice was allocated in the fourth quarter of 2023 to consolidate all the losses of that year (892 million euros). In this case, the company chaired by Marc Murtra wants to spread the amount of the ERE in the current fiscal year, in which Telefónica has already accumulated net losses of 1,080 million euros until the end of September, due to the capital losses caused by the sale of several branches in Latin America (Argentina, Ecuador, Uruguay, Peru and Colombia). In this way the red numbers would be concentrated in 2025, leaving the 2026 budget clean.
Scope. The new ERE is a key element of the Strategic Plan Transform and grow, whose ambitious goal is to increase cost cutting from 2,300 million euros in 2028 to 3,000 million in 2030. As admitted by the group’s CEO, Emilio Gayo, these savings targets include personnel-related items. An agreement with the unions would guarantee annual savings estimated at between 300 and 500 million euros, depending on the scale. This action would not only generate immediate savings, but would also serve to convey to the market management’s firm will to respect its commitment to financial discipline. Furthermore, the ERE cost breakdown in the 2025 budget is seen as “good news” for shareholders, since it will not affect the dividend they will receive in the next few years starting from 2027 because its calculation refers to labor compensation.
Political conflict. The ERE has a political drift, since the State, through SEPI, is the main shareholder of the operator, with the purchase in 2024 of 10% of the capital for 2,285 million euros. On his proposal, in January this year its president, Marc Murtra, was appointed as the main person responsible for the Strategic Plan and, therefore, for the ERE. In this way, the State will indirectly finance the cost of the adjustment, a measure that clashes with the positions of members of the Executive such as the Minister of Labor, Yolanda Díaz, who has repeatedly complained about the massive adjustments of personnel in large profitable companies (the last time with the adjustment of 1,200 Amazon workers).
Historical reductions. The new ERE adds to a long list of adjustments that have reduced Telefónica’s workforce in Spain by almost 80% compared to what it had when it was still a public telecommunications monopoly. Only from 1997 (the year in which the privatization of the company was concluded) to today, the company has gone from 67,000 employees in Spain to 18,305 workers with whom it closed in 2024 in the three branches covered by the CEV, 25,000 if other companies such as Movistar+, Global Solutions and the corporate center are also added.
