Beyond the boom
Saturday, July 14th, 2012
On July 8, employees of GrameenPhone (GP), the leading telephone operator in the country, staged a demonstration in front of the company’s headquarters in the city’s Bashundhara area, demanding reinstatement of recently retrenched employees as well as the assurance of no further job cuts. Financial Express reports that the demonstration was triggered when 48 officials who were served termination notice and found out their punch card was rendered invalid as they came in for their second shift. There contracts were due to end on July 31.
Later that day, GP has clarified that it has shed some excess jobs as part of its efforts to reorganise the business and that those leaving are being given severance benefits as per the law. The UNB report also states that since March this year, GP management slashed hundreds of job positions in the ‘Sales’ and the ‘People & Organisation’ departments.
While some retrenched willingly, others were asked to undergo interviews to remain in jobs in any department in the company. In addition, many of the employees were deprived of a satisfactory increment in their salary this year, said an employee on condition of anonymity.
However, Chief Communications Officer (CCO) of GP, Kazi Munirul Kabir told the media that, “They are doing everything according to the company’s contract for employment and its Code of Conduct regarding job slashing.” He added that restructuring has also opened fresh opportunities to serve new technologies.
Earlier, on July 1, The National Human Rights Commission (NHRC) has asked GP to send details about the company’s recent ‘downsizing’ of workforce, while on June 17, Bangladesh Telecommunication Regulatory Commission (BTRC) also sent a letter to the GP on the same ground.
According to a report on New Age, an association was established aiming to give voice to the grievances by the employees although management asked not to do so. At present there are 4,800 employees working for GP which made a Tk 1,889 crore profit in 2011, up 76.38 percent over that of the previous year.
The new age report also wrote that initially CCO of GP confirmed redundancy but later denied job cuts on the ground of redundancy rather change in their operational model. When the contradiction was pointed out they refused to comment. In case of redundancy, under the Bangladesh Labour Law act 2006, company has to give a months’ notice in writing with explanation of reason. However, management had announced around 350 posts in different departments vacant in a monthly meeting on June 4 and asked employees to take written tests to secure their jobs or leave the company with compensation.
For and against
Since the demonstration, experts and analyst has been divided in opinion. Many supported GP for going beyond the legal requirement and offering a healthy compensation packages. Some raised concern about prevailing Human Resource (HR) policies in Bangladesh. Faisol Chowdhury, senior lecturer of HR at North South University said, “Many of our students at service in different companies had reported back that employees got almost no professional advice on HR policies the company follows.” Often agreements are also written in way that may not be easy for everyone to understand. Hence, at times employees are not aware of their rights and certain loopholes. This generally causes misunderstanding and negative reactions during job cuts.
However he adds, “Globally downsizing is a common practice among businesses whenever company seeks to raise their profit margin. But, all the cases we studied, none would like to call it downsizing or redundency and what we see here is no different.” He believes that sometimes organisations may need to take drastic measures. But employees should be properly communicated by the company and see that they do not go against the workforce.
Nonetheless, it is said often agreements includes a clause that allows employer to terminate jobs without prior notice. GP claimed a fair assessment, but Kabir confirmed Prothom Alo that three of the employees on maternity leave were called back, according to regulations, for written test but refused to answer why would they be called back. Chowdhury says, “There are also other clauses and formalities that companies have to comply with. If properly observed this process may even take over a year before firing someone. Then there are regulations to protect employers from unfair dismissal.” Unfortunately in Bangladesh, since government does not monitor these things, majority people are also not aware of sophisticated HR practices. So often companies do take advantage of that while many does not even go for any formal written agreement. These need to improve to avoid such awkward situations.
While many praised GP for their attempt for a ‘golden handshake’, Chowdhury points out why employees are not willing to do so. “All these people cannot move anywhere else because telecom industry is small or transfer their skills to other matching sectors because they are still underdeveloped. There are many other factors and implications, so people want job security to meet rising cost of living more than one off payments.
Moreover, he believes that the assessment is just a tool in the process of lying off. The cuts were targeted to two departments, ‘People & Organisation’ and ‘Sales’. This might be because on these departments usually there is abundance of entry level workforce. They are easy to lay off and less risky than getting rid of mid or top level management. Now perhaps they have reached a matured stage where they do not need these people any more. Employees are initially hired when they pass employer’s assessment. Once hired they should have interim performance reviews not written tests. So it should also be seen whether these were clarified during recruitment.
Challenges for the telecom industry
The incident also raised question whether the whole telecom industry is under pressure or not and whether other telecom operators are going to follow suit. But, GP confirmed almost 76 percent growth in their profit margin. Banglalink, second largest mobile operator with over 20 million subscribers, reported raising their market share to 27 percent. Although, it is said that 2G market has been saturated but, there are in total 9 crore subscribers out of the population on 16 crore. That still leaves a market of 7 crore. Moreover, a source says that generally 30 percent of subscribers are multiple sim owners.
Chowdhury states that “The word in the job market is that GP’s HR is comparatively weak in manpower planning and forecasting. Moreover this is not the first time we have seen employer dissatisfaction in GP and similar incident was observed previously.” He believes that GP has hired in excess and now they have to cut jobs while other operators are not following the same strategy perhaps because they have an accurate headcount and better planning. Additionally, after this incident perhaps other operators, even if they follow the same cost cutting strategy, would be more cautious with their approach.
The recent measures were also speculated to be linked to massive licensing fees, cost of acquiring 3G and proposal increasing call rates to fund Padma Bridge. The decision to downsize came very shortly after these announcements of fees regarding highly lucrative 3G and just before the auction on September 3. Although all mobile operators are eager to acquire licenses for the next generation of technology but only four, apart from government owned Teletalk, will be allowed the ride. And it is not cheap. To obtain 10 MHz spectrum from allocated 50 MHz, one would have to pay at least Tk. 24 billion. On top there are BDT 100 million license fees, 1.5 billion bank guarantee, half a million application fees and a yearly 50 million license renewal fees. While some inside sources blamed government’s policy and the burden of giant fees. But a comparison shows that in neighbouring India per MHz of spectrum at the pan-India level costs cost over 36 billion Indian rupees.
Such a massive amount of money has to be raised from somewhere. Previously, Bangladesh saw record 1.08 billion USD in Foreign Direct Invest (FDI) when government opened the telecom sector for FDI in 2008 and Telenor, Orascom and TMIB invested a large amount of money. A recent report of says Bangladesh has surpassed that record in 2011 with 1.13 billion in FDI. But, this time only 18 million was brought in to telecom sector compared to over 758 for garments, banking and energy sector. Although, experts argue that once set up telecom do not require huge amount of invest but interest in 3G could have been reflected through better figures. On July 8, a separate report states that Bangladesh Bank approved Orascom Bangladesh to borrow 170 million USD from foreign sources. Nonetheless, none of the companies have made official statement whether any of these findings or incidents are linked.
Lastly
As off last update, following the agitation, BTRC Chairman Zia Ahmed had talks with Tore Johnsen, CEO of GP. They have been asked for details of appointment process, organogram, list of people currently appointed against the managerial position and above, service regulations of the company, a copy of Employment Restructuring Policy and the process of review of its employees. As of last update they were asked to submit it by July 11.
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