Italian Luxury Eyewear Maker Luxottica to Offer Recession Benefits

From WSJ:

"Italian eyewear maker Luxottica SpA is expected to unveil a new social-benefits program for its domestic work force, an attempt to ease the pain as the global economic downturn hits Italy's industrial north.
Cities in northern Italy are home to some of the country's biggest employers. But they've been hard hit as demand for luxury goods has dried up.
Luxottica, which produces eyeglasses under license for brands such as Prada and Salvatore Ferragamo near the Belluno district of Northern Italy, announced plans earlier this year to place about 6,000 workers on temporary, state-subsidized leave for a total of four days during January and February. Last month, Safilo SpA, Italy's second biggest eyeglass maker, said it will idle plants for two months as it grapples with slumping sales and a heavy debt load.
The shutdowns are taking a toll on factory towns, as households scrimp on spending to offset lost wages. Workers who are placed on state-subsidized leave take an average 20% pay cut while their jobs are suspended.
Associated Press
Eyewear maker Luxottica is among Italian companies hard hit as demand for luxury goods fades.
Under the terms of an accord reached after 15 months of negotiations with unions, Luxottica will spend more than €2.5 million ($3.2 million) a year on benefits for its workers ranging from dental care to scholarships. The measures are apart from union contracts that cover wages and working conditions. Employees' health care and social services are covered by the state social welfare system.
"The assumption is practical: You cannot deliver and produce quality products unless people enjoy a decent quality of life and have the basic needs fulfilled," said Nicola Pelà, Luxottica's head of human resources.
Under the new system, Luxottica aims to leverage its scale to buy basic goods, such as baby food, and services at discount prices and distribute them to employees who reach production and efficiency targets.
Luxottica will distribute scholarship money for the children of employees to attend local vocational schools and colleges. In the luxury industry, where know-how is often passed down through generations of craftsmen, keeping young people close to home is essential.
Even before the economic downturn gripped the luxury industry, towns specializing in luxury goods faced tough odds. Over the past decade an increasing number of brands have begun to buy textiles and semifinished materials from countries with lower-cost labor like China.
As competition with China tightened, worker wages across the luxury industry stagnated and workers struggled to keep apace with a rising cost of living. Luxottica's average monthly salary of €1,200, Mr. Pela said, was "above market rate," but needed a supplement. At the same time, Luxottica didn't want to simply raise wages, which are heavily taxed in Italy, he added.
Valeria Fedeli, a union representative for Luxottica's employees, applauded the benefits program, but added: "We're still in a crisis situation."