In mid-August 2008, the Minister of Transport, Costis Hatzidakis, presented a plan for restructuring of the state-owned Hellenic Railways Organisation (OSE). According to the Minister, OSE’s future operation is endangered by: financial problems and increasing deficits; mismanagement and waste; and safety concerns, following recent derailment incidents. The restructuring plan seeks to address these problems through measures aimed at achieving safety, transparency, financial recovery and growth at OSE. The plan should be fully implemented and operational by the end of 2010. The key measures are as follows:
In August 2008, the Greek government announced a restructuring plan for the Hellenic Railways Organisation (OSE), aimed at ensuring its financial viability, promoting growth and improving transparency and safety. The plan includes a major reduction in the workforce, to be achieved mainly through a voluntary exit programme, in order to cut costs. Trade unions at OSE are strongly opposed to the plan and called strike action in protest.
Restructuring plan
In mid-August 2008, the Minister of Transport, Costis Hatzidakis, presented a plan for restructuring of the state-owned Hellenic Railways Organisation (OSE). According to the Minister, OSE’s future operation is endangered by: financial problems and increasing deficits; mismanagement and waste; and safety concerns, following recent derailment incidents. The restructuring plan seeks to address these problems through measures aimed at achieving safety, transparency, financial recovery and growth at OSE. The plan should be fully implemented and operational by the end of 2010. The key measures are as follows:
safety – an awareness-raising campaign for staff on accident reduction and the observation of safety rules, and cooperation with and the transfer of know-how from the French railways;
transparency – the establishment of an internal service to monitor the business contracts signed by OSE, along with the recruitment of staff from the private sector and the introduction of modern management principles;
financial recovery – new rules for the management of debt, a voluntary retirement scheme in order to cut back on spending, and the exploitation of OSE’s real estate;
growth – a new investment programme, which involves the modernisation of existing lines to enable them to accommodate high-speed trains, the creation of new lines to cover a greater proportion of mainland Greece, cutting back on loss-making lines and boosting profitable ones, and an improvement of the services provided.
Workforce reduction
The financial recovery chapter of the OSE restructuring plan includes provisions aimed at reducing the workforce. Stressing that management of the company’s total debt, which is nearly EUR7 billion, is a ‘thorny problem’ and that increased revenues are a necessary precondition, the plan places special emphasis on keeping spending in check. The key actions aimed at reducing spending are lowering project costs and reducing employment levels.
The Ministry of Transport’s plan will reduce overall spending on wages by: not replacing retiring staff members with new recruits; amending the OSE ‘general staff rules’; and using outsourcing to meet existing needs temporarily. The changes to staff rules include having fewer employees on trains (three, rather than the present four) and more staff flexibility. Various additional payments, calculated at EUR 108 million in 2007, will be reduced by 15%-20%.
In addition, a voluntary exit programme is being prepared, similar to those implemented in the past in other state-controlled enterprises, such as the Hellenic Telecommunications Organisation (OTE) (GR0507101F) and Olympic Airlines. It is estimated that, out of a total of 7,400 OSE employees, 2000-3000 will opt for voluntary exit within 2-3 years.
Through these measures, it is estimated that by 2010 OSE’s annual wage costs will have been reduced from the present figure of EUR 400 million to EUR 300 million.
Employees’ reactions
The trade unions representing workers at OSE announced strikes to be held in mid-September, in order to oppose the ‘final dismantling’ of OSE that they claim will result if the Ministry’s measures are implemented. Workers at OSE are exploring the creation of a common front with their colleagues at Olympic Airlines, where the government is implementing similar measures in order to restore the company to financial health.
The unions at OSE intend to step up strike action if the government persists in implementing the restructuring plan.
Commentary
A number of recent governments have announced and implemented restructuring programmes for OSE. Their main features have been cutbacks in OSE’s investment programme and a reduction in wage costs. Nevertheless, deficits have grown as use of the railways has decreased, due to a lack of new infrastructure and investments to expand it into new areas of mainland Greece. Therefore, it seems doubtful whether reduction of spending by holding wage costs down will by itself lead to financial recovery, if this is not accompanied by more railway projects based on increased investment in order to boost OSE’s productivity.
Stathis Tikos, INE/GSEE
Eurofound recommends citing this publication in the following way.
Eurofound (2009), Unions oppose government plan to restructure railways, article.
