ECONOMY

Commission clears state aid plan for OTE pension fund

BRUSSELS (Reuters) – The European Commission said yesterday it had cleared a Greek government plan to transfer a 4 percent stake in OTE telecoms to the group’s pension fund to help finance a voluntary redundancy scheme (VRS). Greece has been seeking permission to transfer the stake to help pay for the exit scheme for about 5,500 workers as part of plans to streamline the company and make it more competitive. OTE has said the plan will cost about -1 billion ($1.35 billion). «The Commission is in favor of measures which help former monopolists adapt to a fully liberalized market environment, provided that they comply with the state aid rules,» European Competition Commissioner Neelie Kroes said in a statement. Due to the life tenure status of OTE employees, from rules dating back to when it was a state-run monopoly, the company offered employees generous conditions as part of the scheme in an effort to reduce worker numbers. The scheme aims to shrink OTE’s workforce to around 10,000 employees. Greece offered to contribute to the costs of the redundancy plan by transferring the stake to the pension fund in an effort to partially compensate OTE for the extraordinary costs. «The reduction of around one-third of OTE staff through the VRS and the agreement of OTE employees to abolish the permanent tenure status for future hires in exchange for the early retirement package, should ensure the company’s competitiveness and further privatization,» the EU Commission said in a statement. The state, which owns about 39 percent of OTE, has said it wants to sell up to a 20 percent stake in the former phone monopoly as part of its state-asset sale plans this year, but has not found a buyer yet. Alogoskoufis said on Tuesday the government leaned toward a private placement of OTE shares instead of seeking a strategic investor.