Ericsson, the world’s top network-equipment maker, accounting for about a third of the industry’s annual revenue, according to consultancy Dell’Oro Group, is cutting jobs in Africa as part of a bid to save almost $1 billion worldwide by 2017. The company had earlier in the year announced it was sacking 2,200 workers in Sweden as it restructures its operations to sharpen the focus on cloud and IT. About 500 workers are expected to be affected in Africa in the ongoing restructuring. The company’s employees in Kenya wants to know who among them will be retrenched.
“In respect to the next phase, forced retrenchment, we seek information regarding the targeted number and employees in Kenya, criteria for determining the targeted employees, details of how to enforce the forceful retrenchment, and the mechanisms if any of deterring victimisation of employees,” Apollo Mboya, a lawyer representing the employees said in a letter addressed to the firm.
The employees claim that Blair Mackenzie, Ericsson’s Head of Human Resources for Sub-Saharan Africa (SSA) Region had in a news flash dated May 27 announced a “right-sizing” initiative within the SSA, with voluntary retrenchment commencing immediately. Voluntary retrenchment had already been done in South Africa, Nigeria, Ghana and Rwanda; the employees in Kenya wants Ericsson to provide them with details of the severance pay for the first phase of the voluntary retrenchment for each of the countries, according to Business Daily.
The workers also want details on any benefits payable to those who will survive the retrenchments, and for what period will they continue to work for the company.
Ericsson said: “An employee who volunteers shall receive the legislated country retrenchment package or as defined in the collective agreements, as well as an Ericsson defined gratuity”.
However, Mboya expressed the shock of the employees that all Sub-Saharan African employees received a letter same day — May 27, 2016– the internal newsflash was issued but was “curiously dated June 30, 2015 which purported to explain the potential retrenchments, and that as an alternative to potential retrenchment, the company is willing to consider voluntary retrenchment for employees.”
Mboya says if Ericsson Kenya Ltd does not provide the information requested by the employees, they will not hesitate to challenge the layoffs in court.
Ericsson is facing a difficult operating environment, as customers slash investment in the roll-out of mobile broadband networks. Competition from Chinese rival Huawei Technologies Co. Ltd. is also mounting.
As part of its restructuring, Ericsson AB’s business will be separated into five new business units from July 1, 2016: network products; network services; cloud and IT products; cloud and IT services; and media.
The three units addressing opportunities in cloud, IT and media will absorb Ericsson’s “targeted growth areas” businesses. The company targets increased revenues from these businesses by 10 percent annually.