By Ilan Brat
MADRID -(MarketWatch)- Telefonica SA /zigman2/quotes/200416613/delayed ES:TEF -2.21% said Thursday it has reached an agreement with labor unions to cut up to 6,500 jobs over three years, as it seeks to lower costs in its struggling Spanish division.
The telecom company said it had reached an agreement with unions provided that it would assume all costs associated with the layoffs, which include 45 days of pay for every year of working plus voluntary separation grants.
Telefonica's job cuts are part of the company's steps to increase profitability at its Spanish division, once a cash cow that has been hit hard by drops in fixed-line traffic and prices amid Spain's worst economic crisis in decades.
Spain's government had criticized the telecommunications company's attempt to conduct mass dismissals in Spain, and the company scaled back its layoff plans from a one-time planned number of 8,500.