Nokia will pay €200m to compensate workers for the closure of its mobile phone plant in Germany. It will also establish a transfer company to help staff for at least one year. Some 2,300 employees will lose their jobs at Bochum.

Nokia was widely critisised for the closure of its plant in Bochum and infuriated many German unions and politicians. Last month, Germany's western state of North-Rhine Westphalia (NRW) told Nokia to repay all its subsidies plus interest by 31 March or face legal action. It is unclear whether NRW will back down.

Nokia executive vice president and supervisory board chair Veli Sundbäck said in a statement: "Nokia has agreed on a fair and responsible social plan.

"We are well aware that closing the site is painful for all affected employees and their families. As we have clear responsibilities to our employees in this kind of difficult situation, it was our special concern from the start to compensate the loss of the jobs in a respectful and fair manner."

Nokia will comment further on the financial costs in connection with its Q1 report due on 17 April.

While production at Bochum will cease by the end of June 2008, Nokia says it will continue to have a strong presence in Germany with a major sales and marketing unit in Düsseldorf and representation through a devices R&D team in Ulm.

Nokia is the only major mobile device maker with an R&D presence in Germany, and its footprint in software is growing with the acquisitions of Gate5 and Loudeye and the pending purchase of Navteq, which has personnel in Frankfurt. ®

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