Karstadt is in the midst of restructuring and store refurbishment in an attempt to compete with other German retailers – a plan which CEO Andrew Jennings said on Monday evening meant letting 2,000 of the 25,000 members of staff go.
“It is painful,” he said, adding that the chain was “suffering both under a complex, inefficient and outdated structure as well as in the difficult financial environment of the euro crisis.”
There would be no wave of shop closures though, Jennings told Tuesday's Süddeutsche Zeitung newspaper.
The cuts are planned to be made over the next two years. Options for reducing staff numbers would include early retirement, optional redundancy and the non-renewal of temporary contracts.
Germany's biggest trade union Verdi expressed outrage at Jennings' decision, calling it “completely the wrong signal to send to staff and customers,” and that Karstadt needed “engaged, motivated workers.”
The company had been facing bankruptcy in 2010 before being bought by investor Nicolas Berggruen. Since then €160 million has been poured into the chain with the aim that 63 of the 80 branches will be completely refurbished by 2015.
Electric utilities company RWE said on Tuesday that it also be cutting 2,000 jobs, mostly in book-keeping and accounting departments “in Europe”. Verdi was quick to warn that this number could rise to 5,000.
A clause in employees' contracts means dismissals cannot be made until January 2013 and Verdi has said that it will fight to extend the contract until 2023, Der Spiegel magazine's website reported on Tuesday.
RWE has been struggling due to the closure of Germany's nuclear power plants and the shrinking gas industry. It also has billions of euros of debt incurred to fund new power stations.
Verdi have requested a meeting with RWE to discuss the fact that “the company want us to give them a carte blanche for unlimited sackings and outsourcing,” Verdi spokesman Christoph Schmitz told the Westdeutsche Allgemeine Zeitung newspaper.