Ericsson, the telecoms equipment maker, on Monday offered a voluntary redundancy package to up to 1,000 of its Sweden-based employees between the ages of 35 and 50. The unprecedented move is designed to make way for younger workers.
The world’s biggest supplier of mobile phone networks, which more than halved its headcount during a dramatic restructuring programme in 2000-02, said the measure was necessary to ensure the competitiveness of the company in the next decade.
“The purpose of this programme is to correct an age structure that is unbalanced,” said Marita Hellberg, global head of human resources, told the Financial Times. “We would like to make sure we employ more young people in order not to miss a generation in 10 years’ time,” Ms Hellberg said.
But Makbool Javaid, employment partner at City of London law firm DLA Piper, said the programme left Ericsson open to potential compensation claims.
“The fact that they are recruiting people up to the age of 30 could be used against them to argue that their decision to limit the programme to 35-50 is potentially a practice biased against their older workers,” he said.
Carl-Henric Svanberg, Ericsson chief executive, recently said the company’s age structure and low staff turnover – about 1 per cent in a year – were storing problems for the future and had to be addressed.
Mr Svanberg, 53, has set the minimum target for staff turnover at 3 per cent.
Ms Hellberg said Ericsson would recruit 900 new employees up to the age of 30 in the next three years. The average age of Ericsson’s employees in Sweden is currently 41, against 39 for the company’s worldwide staff. This compares with 35 at Nokia, the Finnish telecoms manufacturer.
According to Ms Hellberg, Ericsson’s age structure had become too heavily biased to the 35-50 age group in the aftermath of its restructuring programme.
Employees aged between 35 and 50 with a minimum of six years’ service are eligible for the voluntary redundancy package that comprises 12-18 months’ salary, a SKr50,000 ($6,600) pay-out and the chance to participate in a career change programme.
Christer Eriksson, the representative of the white-collar workers’ trades union at Ericsson, said the company would not find it difficult to enlist volunteers for the scheme.
Ericsson last Friday reported a 24 per cent year-on-year rise in net sales to SKr39.2bn in the first quarter but said operating margins had fallen from 21 per cent to 16.9 per cent.