Moravian steel giant offers record-high severance pay

North Moravia, already suffering from severe industrial decline, has been dealt another blow, with the region's largest steelmaker about to begin laying off 2,000 people. But Ispat Nova Hut is offering workers an unusually generous severance payment of up to 25 months' salary.

Moravian steel giant offers record-high severance pay

Ispat Nova Hut currently employs just under 11,000 people. In a region with a population of 1.2 million and an unemployment rate of a whopping 16%, it is one of the most important employers. However, destructuralization, privatization and aspirations to become more competitive have forced it to lay off some 2,000 employees by the end of next year. But northern Moravia is still recovering from massive lay-offs ten years ago when much of the coal and steel industry was shut down.

To soften the immediate impact, the Ostrava steelmaker has decided to offer those employees who have worked at the firm for at least five years a generous severance pay equal to up to two years' salary. The condition is that employees hand in their resignations by November 12th. Many employees have welcomed the offer - unusually generous by Czech standards - with open arms:

"My husband and I are still thinking about it but I think I will take the offer because I'll be retiring in three years so I think that the money will come in handy. It will give me time to spend time with my grandchildren."

"I will definitely use the opportunity and with the money I will try to start my own business."

"I am not going to take the offer. I want to stay here until I retire."

Nova Hut employees have been able to hand in their resignations since Monday. By two o'clock in the afternoon, more than 600 people had already done so. Ivo Celechovsky is Nova Hut's spokesman:

The employees of Ispat Nova Hut, photo: CTK

"We could not foresee how much interest there would be but based on our estimates, which we calculated according to average salaries at Nova Hut, we can afford to give special severance pay to some one thousand employees. However, company management reserves the right to reject applications from those employees who we can't afford to let go. We obviously can't shut down some departments just because all of its workers jumped at the offer."

Nova Hut management has until November 26 to evaluate all applications. The average monthly salary in the company is a little over 22,000 Czech crowns, about 730 US dollars. This means that by the end of this year, several hundred employees could find themselves celebrating Christmas unemployed but some half a million Czech crowns richer, a sum that economists say would take most Czechs a decade to save.