Controversy over planned reduction in railway workforce

In July 2003, Austria's State Secretary for Traffic Affairs announced a proposal to cut the 48,000-strong workforce of the state-owned Austrian Federal Railways (ÖBB) by 12,000 within seven years. However, the government's overall plans for restructuring ÖBB are still unclear and the State Secretary's proposal to use a special ÖBB early retirement scheme as part of the planned workforce reduction has caused friction within the government, as it is inconsistent with a recently announced pensions reform. The Union of Railway Employees (GdE) is opposed to the proposed job losses and to plans to remove railworkers' current civil service status.

Since the coalition government of the conservative People’s Party (Österreichische Volkspartei, ÖVP) and the populist Freedom Party (Freiheitliche Partei Österreichs, FPÖ) took office for the first time in February 2000 (it started a second term in February 2003), it has launched several initiatives to restructure the state-owned Austrian Federal Railways (Österreichische Bundesbahnen, ÖBB). The government’s aim has been to reduce the financial burden on the state arising from its legal obligation to compensate for ÖBB’s deficits. However, so far the two governing parties have not managed to reach a joint agreement on how to reorganise this public company. Recent ÖVP plans (presented in January 2003) to transform ÖBB into a holding company, heading several independently-operating enterprises specialising in sales, infrastructure, financing, personnel management etc, were strongly opposed by the Union of Railway Employees (Gewerkschaft der Eisenbahner, GdE) (AT0302201N). The union argues that splitting up ÖBB would pave the way for the privatisation and sell-off of the company’s divisions one by one. With GdE threatening industrial action in the event of ÖBB being dismantled (AT0211201N), restructuring measures such as those planned by ÖVP and – in principle – supported by the management have hitherto been blocked.

Workforce reduction initiative

In late July 2003, the State Secretary for Traffic Affairs, Helmut Kukacka of ÖVP - whose portfolio includes the restructuring of ÖBB - made public a number of proposals aimed at achieving significant workforce reductions at ÖBB, which he regards as overstaffed. Under his plans, ÖBB's 48,000-strong workforce should be reduced by 12,000 within seven years. Of the 12,000 workers considered to be surplus by Mr Kukacka, some 7,000 should leave by 'normal' retirement, whereas the remaining 5,000 should be either integrated into a new 'personnel management agency', which would retrain workers and hire them out to other companies, or placed on early retirement. Since most railway employees are career public servants (Beamte) and thus have an absolute protection against dismissal (AT0204201F), Mr Kukacka stated that ÖBB management would, to a certain extent, have to resort to the possibility of using early retirement for surplus workers provided for by a special law relating to ÖBB, the Federal Railways Act ( Bundesbahngesetz, BBG). In total, the State Secretary estimated, these workforce reductions would result in annual savings of up to EUR 600 million in the short run and about EUR 1 billion in the long run.

However, it turned out that this initiative had not been coordinated with the Minister for Traffic Affairs, Hubert Gorbach of FPÖ. Although Mr Gorbach, in principle, agrees with the State Secretary on making significant cuts in railway staff, he rejects the idea of using the special early retirement pensions scheme provided for by the BBG. The context is that, a few weeks before, the government announced a thoroughgoing reform of the whole Austrian pensions system, including a regulation aimed at making the widespread but expensive early retirement pensions less attractive in order to ease the financial pressure on the public pensions system (AT0305201N). Against this background, the (implicit) promotion of the special ÖBB early retirement scheme by Mr Kukacka was widely perceived as inconsistent.

Interestingly, at the end of July, only a few days after the State Secretary announced his staff reduction plans, ÖBB management placed 38 employees on early retirement, with the youngest aged only 37 years. All of them were pensioned off under the special ÖBB early retirement scheme and thus without any medical certificate, since this retirement scheme does not require any medical reasons but only business ones. Since use of such early retirement practices is not usual at ÖBB, GdE presumed that there had been political interference with management, aimed at anticipating the government’s restructuring (ie workforce reduction) programme. One representative of management stated that there had been an internal order from ÖBB’s chief executive, Rüdiger vorm Walde, to explore the potential for workforce reductions, including the use of the special ÖBB early retirement scheme.

Staff status challenged

Apart from the government’s main goal of cutting ÖBB’s workforce, it also plans to replace the current public service employment regulations applying to railworkers with private law employment relationships similar to those of large companies in the private sector. Accordingly, sectoral collective agreements regulating employment conditions should be concluded. In this way, the government argues, the whole set of special ÖBB service regulations - including employees' permanent tenure, which carries absolute protection against dismissal - could be abolished. Thus, the company would be entitled to give its employees notice of termination of contract for certain reasons. Mr Kukacka warned that if the present service regulations remain unchanged, and given that the coming restructuring process will relieve the state of its current duty to fund ÖBB’s infrastructure (as laid down in §2 of the BBG), the whole company could become bankrupt.

Plans draw criticism from GdE

The statements from the State Secretary led to considerable shock and irritation among ÖBB’s workforce. Wilhelm Haberzettl, the chair of GdE, stated that the threat to 12,000 jobs and the 'discrediting' of railway employees as a whole by the government (ÖBB's owner) is irresponsible and has seriously demoralised the employees. Mr Haberzettl stated that the current service regulations for railway employees were introduced as compensation for lower pay, the lack of any severance payments, and higher social insurance contributions compared with employees in the private sector. Moreover, he claimed, reductions in staffing levels over recent years have continuously increased the demands on remaining employee, with the result that the workforce as a whole works more than 6 million hours of overtime each year. If the government really wants to make ÖBB fit for competition within the liberalised EU railway market, it should remove the existing discrimination against the company in comparison with competitors in the private sector in terms of non-wage labour costs and taxes, GdE claims. Therefore, the union will be ready to oppose strongly any restructuring measures which focus only on significant workforce reductions and splitting up the company (in order to privatise either the whole group or at least some of its divisions), such as those proposed by the government.

Commentary

There is no doubt that the state-owned ÖBB runs at a notable deficit - the figures vary between EUR 1 billion and EUR 5 billion per year depending on the definition of the company’s core operating field. Similar to many other (former) state-owned companies, vast potential for making economies has long been ignored. However, although the BBG legislation was introduced in 1992 in order to make the company fit for competition, there are still several legal restrictions preventing the company from performing well.

Since March 2003, when the European Union’s railway market was completely liberalised, the government has been obliged to restructure the quasi-monopolistic ÖBB. However, this does not necessarily mean splitting up the large and traditional ÖBB, as sought by ÖVP and parts of FPÖ. The State Secretary’s surprising proposal to reduce ÖBB’s workforce by 12,000 employees by 2010 (even by way of special early retirement regulations which obviously conflict with the principles of the government’s new pensions reform) without presenting a consistent joint position on restructuring, indicates that the government is prioritising short-term budgetary effects rather than the maintenance of Austria's last large public company and its workforce. (Georg Adam, University of Vienna)

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