Published On: Thu, Jun 4th, 2020

Cost-cutting measures become bone of contention

GEBE Power plant Cay Bay

PHILIPSBURG – In a letter to the Second Chamber dated May 19 State Secretary Raymond Knops wrote that one of the conditions for providing liquidity support to St. Maarten is a “decrease of 12,5 percent of the complete package of labor conditions.” In other words, it is not necessarily a cut into gross salaries.

In a letter dated June 2 to the supervisory boards of five government-owned companies, Prime Minister Silveria Jacobs wrote that cuts in personnel costs are “not limited to the salaries of employees and can include reductions in vacation pay, bonuses, overtime and working hours.”

In other words: salaries are not out of bounds, but there are alternatives.

Utilities company GEBE has picked up on this and presented in an internal notice how it arrives at that 12.5 percent cut without touching the salaries of its employees. Listing six cost-cutting measures, director Kendrick Chittick presents savings totaling 2,290,508 guilders ($1,279,613). The annual personal costs for 2020 are budgeted as 35.6 million but the cost-cutting measures are for a period of six months. Applied for a whole year, GEBE would, therefore, save 4,581,016 guilders ($2,559,227) – slightly above the 12.5 percent target.

GEBE cost-cutting measures

Some of the cost-cutting measures do affect the labor conditions, but one big question mark remains: GEBE also ads more than a million guilders (to be exact: 1,089,408 guilders or $608.608) in savings under the heading vacancies. That’s money it won’t spend on people the company will not hire.

Other cuts (the amount between brackets represents the projected savings, not the actual costs) affect tuition (350,262 guilders), daily allowance (188,652), travel and lodging (425,941), miscellaneous personnel costs (95,342) and gifts, celebrations and alcohol program (140,895).

GEBE’s approach differs from the path telecom provider TelEm has chosen: a straight cut into its employees’ salaries of 12.5 percent. The union has rejected this proposal as “indecent” but director Kendall Dupersoy is undeterred. In a letter dated June 3 to the St. Maarten Communication Union, he writes that the union’s president (Ludson Evers) “went to the media and made several untrue accusations about management mismanaging the company.”

Dupersoy furthermore notes that from the beginning of his tenure he has indicated to the union that “many of the acquired benefits of the employees are no longer feasible in the current telecommunication business.”

TelEm’s revenue has “decreased drastically following global industry trends.” Adding insult to injury is the takeover of competitor UTS by “a huge international telecom provider.” “If we want TelEm to compete with competitors and survive we must cut costs, I cannot stress this enough,” Dupersoy wrote.

Telem CEO Kendall Dupersory - SMCU union leader Ludson Evers - 20200603

The TelEm-director presents a gloomy outlook for the near future, saying that a further drop of revenue between 30 and 50 percent during the next 8 to 12 months is possible if the virus returns in the fall.

Dupersoy questions the union’s statement that it will not accept any cost-cutting measures that will have a negative financial impact on employees. “Is SMCU indicating that you are willing to jeopardize not only TelEm as a company but aid to St. Maarten as a country?”

In the last paragraph of his letter, Dupersoy hints at hidden agendas: “I sincerely hope that we can move forward in a professional manner with no hidden agendas or personal beefs and negotiate in good faith in the best interest of all stakeholders.”

Watch/listen to SXM Daily News interview with TelEm CEO Kendall Dupersoy here>>>

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Relevant links:
Letter State Secretary Knops to Dutch Second Chamber dated May 19, 2020
GEBE Internal Notice – financial aid conditions
Letter June 2, 2020, to Government-owned companies re cost-cutting measures
TelEm Response letter to SMCU Cost-Cutting Measures
Union wants forensic audit at TelEm reinstated
SMCU union rejects TelEm’s pay cut proposal
Reply letter SMCU union to TelEm
Financially Troubled TelEm
Telem sends letter to union; all salaries to be cut by 12,5%
TelEm Letter to Union re decrease labor conditions
Stimulus plan asks Netherlands for 254 million