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IBM Europe Workers Strike
csimoes writes "IBM employees in Europe are on
strike today. This is in response to the 10,000-13,000 job cuts that IBM is planning, most of them in Europe. Strikers will be wearing black and blue to signify their struggle. Here is their main union web site. Now I can't say I'm big union guy, but they do make some interesting points on their site. Such as: "IBM is a wealthy and successful company. Its first quarter profit for 2005 was $1.4 billion, and $9 billion for the whole of 2004. It increased the dividend to its shareholders, recently bought back $5 billion in IBM stock, and acquired 19 companies in 2004." The union also questions if other cost cutting mechanisms could achieve the same effect without cutting so may jobs."
Isn't their job to be certain they can provide profit in the future for their shareholders (the owners of the company). Why would a company want to keep 10~13K employees that are obviously not necessary in the daily business? Simply because they are making a profit?
I'm not a fan of layoffs either but a company is there to make money, nothing else. If these 10~13K people banded together and started a competing company maybe they could make IBM pay in that direction. In the end employment is voluntary. I don't hear people screaming about someone quitting IBM when they take their experiences there and help another company use that knowledge. What about all the training and investment IBM made in those people, do they think it was free?
Seems like every time I'm in Europe there is a major strike happening.
"The union also questions if other cost cutting mechanisms could achieve the same effect without cutting so may jobs.""
Give upper-managment a pay cut.
Corporations should have some social responsibility attached to their privilages - after all they are granted permission to exist by the people.
No 'make work' jobs should be encouraged, it's just a waste of economic resource, but strongly suggesting to such companies that they should look into retraining and redeploying their workers rather than just firing them en mass would be a good idea as the shock of such large events can permanently damage communities and economies.
That and I seriously hope the board of IBM is taking a huge pay cut. Lead by example and all that.
Beep beep.
It's a sad thing these days but cutting executive salaries often hurts the company in the eyes of the economic elite. I suppose it's for two reasons:
Even though cutting back executive salaries just a tiny bit would suddenly make up for all the workers laid off...
To say that "IBM is a wealthy company" with "$9 billion in profit in 2004 is completely misleading. What IBM made in absolute dollars is not really relevant.
Let's say I offer you an investment. If you give me $X, I'll give you $X + 100 a year from now. What a great deal - you are guaranteed a profit. How could you possibly turn that deal down?
Sure, it's great if X = 100. Then you'll make a 100% return in one year. Cool.
What if X = 1,000,000,000. You give me a billion today, and I'll give you 1,000,000,100 in a year. Suddenly it doesn't sound like such a good idea, does it?
IBM made about $4.87 per share last year. At the current share price ($76.51), that means IBM's return was about 6.4%. Not too shabby, but not really all that great when risk-adjusted.
In fact, IBM's share price has gotten RIPPED in the last few months. A year ago it was trading ~90, which gives us a return of only about 5.4% - not very impressive.
Sure, $9 billion seems like a lot, until you realize how much capital is being employed to generate that $9B. And how many shareholders need to divide that up. Shareholders like pension funds, university endowments, and widows and orphans.
I'm not saying the workers are wrong here, I'm just pointing out that it's completely fallacious to call IBM a "rich company" just because it made a large number of absolute dollars last year. That money comes from or goes to someone - to everyone who holds an indexed mutual fund, for example.
Does this look familiar? US union, Euopean issue. YEt another attempt by the CWA to organize industries that have little interest in unions.
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"I'd rather be a lightning rod than a seismometer." -Ken Kesey
Comparison to US is misleading.
The average salaries in Europe are lower compared to US but overall cost is higher because of HUGE hidden taxes. It works like this: A company wants to give your employee a bonus, say 1000 euro, but the company will have to pay additional 800 euro to the government also. If the real taxation was included in the paystub, the average salary taxation level would be around 60-70%.
I doubt that we will ever figure out - and I suspect that even if we did figure out we couldn't do much about it
I just saw Roger and Me, a Michael Moore film where he criticizes GM for laying off workers in Flint Michigan. He starts the movie showing the place where the UAW had a major victory in the 30s, but didn't seem to see the connection between the union activity and the fact that the plant were being closed in Flint because Mexican workers will do the same job for much less. American and Eurpoean workers have been priced themselves out of the market. To continue receiving these exorbitant salaries, they need to be more productive than people who are willing to work for less.
Vote for Pedro
There may have been some dead wood in the company that needed to be culled, but quite a lot of those people are brown nosers who have figured out how to misrepresent their skills to managers who have no technical experience. Laying off massive amounts of people, hoping to cull these folks is like playing a shell game. It ain't working. It's demoralizing the employees that are left and the people with real talent are jumping ship...fed up with over work, pathetic management, endless meetings, and not enough talent left to actually implement designs.
So...if that's the results of appeasing stock holders here in the states, why in the world would you want to do the same thing in Europe? Yeah, there's a lot of peple just getting by; never really doing anything. But if management is not competent to figure that out and the en masse layoffs to get rid of them are failing and demoralizing...then you're possibly causing more harm than good by doing it.
IBM is too full of processes, too top heavy (duh as if y'all didn't know that already), and people are constanty job hopping in the company every year or two (or being restructured) with the result that no one know how the hell to do their job.
IBM just wants to make it's profit even bigger. By employing Indian's and sacking European's, they are doing just that. Sad but true.
Sad if you're a European. Excellent if you're an Indian.
How should a poor country try to get richer? By building up skills and capital to attract industry, which is exactly what India has done. More power to them. TANSTAAFL.
I find it amusing that many self-avowed liberals decry economic inequality, but then they complain when the market starts to shift wealth away from their own rich countries.
"The danger is not that a particular class is unfit to govern. Every class is unfit to govern." - Lord Acton
Bet you aint 50 yet.
Believe it or not, most people do not take jobs based simply on salary. They consider the benefits package, location, and a host of other factors. It's very common - in the States anyway - for someone to take a lower-paying job because it doesn't require him to move or because it has a better health insurance program. The employee says, "It'll cost me $X to move and get insurance on my own, and that's more than the amount I'm 'losing' by taking the lower-paying job. So this is the best job to take."
It helps out the employee by letting him choose the best job for his unique situation; it helps the employer by giving it the freedom to offer the package it can afford. Thus people who are maybe "marginal" applicants can get jobs where otherwise they couldn't (because nobody could afford to take a chance on them). That's how I got my job. No severance package, retirement, or anything else, but in exchange I got a job, with zero experience, that usually needs five years of experience.
Note that I'm not saying our way is better than the European way. But many Europeans don't seem to understand that there are some advantages to the free(r)-market approach, and I wanted to explain some of them.
Hmmm i moved from the UK to the US (with the same company) and didn't notice much difference in my paid vacation.
In the UK i got 30 days + xmas and new year
In the US i get 16 days + MLK Day + Memorial Day + Presidents Day + Independence Day + Day after Independence day + Labor day + Thankgiving + Day after thanksgiving + 5 days for xmas and new year.
UK Total 32 days
US Total 29 days
Plus once i hit 8 years of service i'll get another week, bringing the us total to 34.
Now i rather the european model of not giving you pointless days here and there, and actually giving you enough to take a 1 month break every year... but that's just me.
May not be the same everywhere but i'm looking at another US company that's going to offer me 30 total.
Your opinion might change if you ever work 20 years at a company and actually become an executive.
The percent of money the average worker makes versus an executive has drastically shrunk in the last 20 years.
In 1980, the average CEO made 42 times the average salary of the regular workers at his company. In 2000, the average CEO made 419 times the average salary.
The pay gap between executive and regular workers has drastically gotten out of hand. We're at the point where nearly 40% of an entire company's payroll is going to one person.
ps: I'm an indian.
"There is no flag large enough to cover the shame of killing innocent people."--Howard Zinn
The reasons are socio-cultural, as much as economic-rational. The executive class is pretty much the same type of people who are the economic elite. E-staff sit on the boards of other companies. They remind themselves of each other. Even fund managers are just that - fund managers who percieve themselves as largely in the same class as E- and C- level management.
In a word, it's log-rolling. It's the logical consequence of shareholder capitalism, and its leading to winner-take-all screw-the-worker approach.
I don't want to live like a Mexican peasant in a maquiladora. Neither does he; he would rather live like an American. We will BOTH be forced to enjoy the peasant lifestyle if wealth becomes too polarized, and that's what's happening. The rich are only rich at the sufferance of a populace that either cannot or will not give up its wealth to them. Democracy is the great pacifier in this regard. However, with the present oligarchical manipulation of democracy, it is failing.
Rich people tend to use their money to take money from other people (consolidation of wealth), and fundamentally this activity is antisocial and evil. Disguising it in layers of Adam Smith pie-in-the-sky theories about invisible hands and shareholders' value doesn't justify activities that harm many for the benefit of few.
Geez, these bleeding heart conservatives...
This is a classic anti-union argument, and can be quote verbatum back to the "robber barron" days of the late 1800s. On its face, it assumes that the union leadership dictates, and the rank-and-file follow like sheep, being too stupid to consider their "best" interests. If true, then one might as well eliminate the middle man since management is already perfectly capable of dictating.
On the other hand, it just might be that the rank-and-file are as capable of recognizing their best interests as a stock market is at allocating capital resources.... that is to say, usually they can, occasionally they lack 20/20 vision to think through new circumstances, and sometimes a small clique can fool everyone for a while.
Circumstances since the end of the Cold War shows that you can only count on management (and stockholders) to look after their own interests. Now that there's not even the mirage of "another way", w/in the US at least quite a few of them seem to feel that putting the screws to their employees isn't only possible, it's a mandate from the Almighty.
I'm sure that a portion of the labor pool doesn't want to work in a union shop. The size of that portion is difficult to assertain, given the tread towards smaller work sites (you're easier to single out) and legal roadblocks (in legislatures, executive branches, and courts).
Luke, help me take this mask off
"$13 million in the proceeds of a stock grant sale and options exercize to J. Bruce Harreld alone. Bruce Harreld came from Boston Market several years ago where he also helped drive that company straight into the shitter."
The US is diseased and along this line may eventually be deceased. This is something that I had observed for a long time; a short-sighted corporate culture in the US that rewards executives for self-serving, soul-sucking practices. US company after US company are being driven into the shitter; the exceptions seem mainly those companies that are run by their founders or their family, but for those in which management is recruited, there's too often a streak of executives whose sole concern is their rewards during their term, and to hell with any hint of a future for the company or anyone else. The US will pay for this, as US company after US company will fold. Look at GM and Ford suffering now thanks to the shenanigans of the 1980s and since; you could develop products that people want and grow a viable business, or you could cook the books, sacking left and right, playing with numbers to show what you want, and too often US executives have chosen the latter. It's a shame for Ford and GM; they've done every henious thing, from addresses in the Cayman Islands to blaming unions and social responsibilities and lobbying washington, eventhough their competitors in Europe and Japan face bigger social responsibitilies and higher costs of doing business, yet their companies have prospered and are taking US carmakers to the cleaners, thanks to a stricter set of legal rules that forced their executives to focus on the essential and true ways of running a company. Warren Buffet, a man whose preferred holding period for a stock is "forever", has been yelling for a while now that executives need to be disciplined by a new set of rules encoded into law; and I wholeheartedly agree.
when you are making $9 billion in profit a year it is bloody unethical to lay off the people who help make that profit
It isn't unethical if those people are just free riders. What if that $9 billion in profit was mostly because of the work of the people who didn't get laid off?? Is it ethical to to keep on extra people who aren't really contributing to that profit at the expense of those who are doing the hard work??
If those people who are laid off were contributing to that profit, I'd expect to see IBM's profits to go down in the long term. If they weren't I'd expect the profits to go up. We can wait and see what happens and find out if IBM is making a mistake... but either way they aren't being unethical.
I know what it's like to work with dead wood. And I think it's perfectly fine to get rid of the dead wood. Now, some of those laid off are probably not dead wood, but they can get another job (maybe even with IBM). Skilled, hard working people are always very hard to find.
What is unethical is how so many people think a job is an entitlement and drive whole companies under with their selfishness. When whole divisions fail, it's because of a pervasive culture of this selfishness. It's because of free rider leeches who do nothing but enrich themselves at the expense of the common good.
(bracing for negative mods... but please look up what troll and flamebait really mean before hammering away at my rant)
There are 10 types of people in this world, those who can count in binary and those who can't.
Yes, sympathy is justified. And I say this as my brother in law was just laid off. But just because we feel sorry for them - and I do - doesn't mean IBM is wrong to let them go. The unionists point to the fact that IBM is making a profit to justify their jobs. But that's irrelevant - should IBM wait until they're in the red overall to reduce their payroll? Is the situation of the overall company more important than individual divisions? What if IBM is okay but they have a division hemhorraging money? Can they get rid of that division or not?
Bottom line, there comes a time when a company needs to change direction, and unfortunately that means bad things for people. And yes, we should feel sorry for them. And yes, IBM should provide them with decent severance. But it doesn't mean that IBM has to keep them on forever.
There is definitely a pervasive looter mentality in corporate boardrooms in setting these outrageous salaries... these salaries are for the most part too high. However, barring the current abuses, good leaders should make a lot more than most other employees. There is a severe shortage of them, and they can increase profits by way more than they're paid.
Just look at Apple pre Steve Jobs vs. post Jobs. How much was his leadership worth? Apple's massively turned things around... not only protecting the jobs it had, but adding tons of new ones around the world.
Of course, since they're on such a hiring binge now they surely are not always hiring the best people... and they will probably lay off a lot of people as soon as their growth slows enough to let them do so. If such layoffs are unethical, they should not be hiring people that they don't plan on keeping around... but that sort of wrong-headed ethic would be bad for Apple and bad for the people who are going to get laid off (they wouldn't have a job right now).
There are 10 types of people in this world, those who can count in binary and those who can't.
After being through a half-dozen jobs in my life I realized that a capable person losing a job is an opportunity, not a tragedy.
Sure, if one person gets fired they'll bounce back - especially if their former employer gives them half-decent severance and all that.
On the other hand, if IBM closes down an office or otherwise terminates 2000 IT folks in the same town, there is no way that most will bounce back without relocating. No job market can absorb that many people when they have specialized jobs.
Cuts of that scale really are tragic. I'm not saying the solution is government regulation, but that doesn't mean that everything is swell either...
What should happen is that you should have to compete with people willing to work for a fraction of your income, and then the market will decide that you are overpaid.
That's the scenario we are moving to: a few very wealthy executives in the first world essentially making money off of work done by people in the third world. You think that CEO's who are making in the low 7 digits aren't getting paid enough, and that Europeans getting paid in the mid-5 digits are overpaid. I thik this suggests a kind of fascination with authority and power that has distorted any sense of fairness, or any idea that economics should serve people, not vice-versa.
Or maybe the American's have priced themselves into slavery as workers. 40 hours weeks, paid over time, 4 weeks leave a year, these are all things that other countries take for granted. How much leave do you get again?
Not Meta-modding due to apathy.
Don't be disingenuous. There is a real prescriptive aspect to economics, as well as the analytic one. The prescriptive one is the one that treats people as both completely rational and completely instrumental: as both agents and resources, and advocates for political choices based on the optimization of certain statistics. The term "standard of living" is just one of those statistics, since often, in practice, it relies on some standard of gross productivity over lifetime, or gross income.
There's nothing wrong with efficiency, but turning efficiency into an end rather than a means is part of the pathology of the modern.
At one time not so long ago companies took pride in not laying off people. The boast was that X company hasn't laid off a single work in so many decades.
Management tried not to layoff people as much as possible because laying off people was seen as a shameful thing to do - an admission of failure on the part of the management to run the company profitably.
To avoid this loss of face, companies resorted to cutting management pay, selling assets and so on. The moment a company announced a layoff, it would appear all over the papers - the market will see it as a sign that the company is down in the dumps.. analysts would rate the company down.
But now the situation has completely reversed. When a company announces huge layoffs, analysts actually rate the company higher. Also, the management will now gloat about how they have "streamlined" operations.. cut of the extra "fat".. become "lean and mean".. etc.. The implication is always that the layoffs were a smart thing to do.
There is no shame anymore..no accountability on the part of the management. The fact that thousands just lost their jobs because the business strategies framed by the suits came up a cropper does not seem to fill the management with a sense of shame or remorse. Fact is, after a round of layoffs, the executives might even give themselves a pay hike!! They will also announce proudly about how they have "increased" their profitability and worked on the "bottomline".
It is quite sad. There is very little honour anymore.