Tallink cuts could hit every third employee

Baltic Sea shipping giant Tallink has launched major reorganization, with layoffs, unpaid leave and other cost-cutting measures to hit up to 2500 employees. Photo: Erik Prozes

Baltic Sea shipping giant Tallink has launched major reorganization, with layoffs, unpaid leave and other cost-cutting measures to hit up to 2,500 employees in countries where the company operates.

Tallink employed over 7,200 people at the end of 2019. This week, the Unemployment Insurance Fund will receive the first collective layoff notices from Tallink that concern some 1,000-1,500 Estonian employees, while CEO Paavo Nõgene said this does not necessarily mean all of these jobs will disappear.

“The question is of the developments over the next month after which specific layoff notices will be sent out. We will negotiate with the parties before that time comes. The final figures and activities will become clear after that,” Nõgene told Postimees.

“It is clear that if there is no work to give people because borders are closed or because there are no clients and without decisive state intervention in the form of long-term salary benefits for the sector, the tourism sector will have to go down the path of layoffs and start hiring again when demand returns in spring,” the head of Tallink added.

The shipper notified the fund of 400 layoffs, mostly concerning hotel staff, on Wednesday. “Based on the preliminary notice, this round concerns three companies,” said Lauri Kooli, communication adviser for the fund.

Layoff notices were handed to 225 employees of TLG Hotell OÜ that administers all Tallink hotels and still employed 420 people around New Year’s. Of the 171 employees of Tallink Duty Free, 75 received a notice of layoff, while Tallink Group aims to lay off 100 of its 461 employees.

The layoffs are scheduled to take place in December, with union talks the next step in the process after which a final notice will determine how many employees will be affected and how. The group has also launched a new collective layoff process in Latvia.

Unpaid leave in Finland

All 1,200 shore and maritime employees of Finnish subsidiary Tallink Silja Oy will be forced to go on unpaid leave in some capacity, including the crews of Tallink ferries Silja Serenade and Baltic Princess.

Efficiency processes launched at Tallink will affect up to 2,500 employees in all countries, while what will happen next will be determined in the course of talks, the company said.

Chairman of the Estonian Seamen’s Independent Union Jüri Lember said that reorganization at Tallink should be discussed at three-way talks with government and Unemployment Insurance Fund representatives. While the union is aware of layoff plans for sailors, Lember refused to disclose them as Tallink is a listed company.

It [the final number of layoffs] depends most on the coronavirus situation and passenger traffic between Finland and Estonia. If there is no ticket revenue, that figure will also depend on our ability to find solutions working with the government,” Lember said.

“The union made a proposal today (Wednesday – ed.) to discuss this matter /…/ on a higher level, three-way talks involving government and Unemployment Insurance Fund representatives. Such a format is needed when talking about the jobs of over one thousand people,” Lember said.

He said that, ideally, people should be given job security and the employer and state could find a way to retain jobs until this spring by which time is will be clearer what will happen.

Tourism travel still disrupted

Tallink CEO Paavo Nõgene said that ticket sales have taken a hit from increased number of COVID-19 cases, home markets’ different approach to travel restrictions and information noise in the Finnish media as concerns travel recommendations. He added that lack of decisions regarding new state support has led to a situation where the company will have to rapidly optimize processes to ensure its viability.

Because it is not possible for Tallink to offer already dialed back services in planned volume, the shipper simply doesn’t have enough work to give people.

“Plans made this spring counted on trips to Sweden returning in late summer. The situation today is that Sweden remains closed to tourism and tourist travel between Estonia and Finland is greatly disrupted,” Nõgene said.

He added that he hopes Estonia, Finland and Sweden are considering additional salary support instruments for tourism operators that would allow Tallink to lay off fewer people.

“If countries make support decisions quickly or should the market situation change, we stand ready to revise our plans and decisions and rehire people,” Nõgene said.

“Tourism companies and others that depend on them have lost the most in this crisis and their recovery will also take the longest. It is clear that in order to retain sustainability and competitive ability in the sector, considerable and decisive state support is required at least until early summer next year. Germany serves as a good example here after it decided to extend salary support measures at least until the end of 2021,” Nõgene added.