Wage increase for railway workers

Estonian railway workers are in line for a pay rise, plus a 7.5% bonus after concluding a new collective agreement with Estonian Railways. It comes after heated negotiations, sparked by the discovery that the salaries of the executive personnel of Estonian Railways had been increased, with a 17% bonus, while the wages of other workers were frozen. The Trade Union of Estonian Railway Workers threatened strike action, but the parties reached an agreement by the end of April 2011.

Background

Estonian Railways (Eesti Raudtee) has undergone major restructuring in previous years due to the economic crisis. In 2007, around 200 people were made redundant with another 200 laid off in 2008 because of cuts in services, automation and work reorganisation. In June 2008, the Trade Union of Estonian Railway Workers (ERAÜ) picketed the government building to protest against the redundancies (EE0808019I).

Redundancies continued in 2009, as another 110 employees were laid off due to a decline in commodity flows. The salaries of railway workers were also frozen, due to the difficult economic circumstances. Since 2010, the number of employees has slowly started to increase.

Negotiations over new collective agreement

At the end of March 2011, it was revealed that the executive personnel of Estonian Railways had been rewarded with a 17% bonus in 2010, while the average railway workers’ bonus has usually been set at 3% of their pay. It also emerged that the net profit of Estonian Railways had trebled in 2010 compared with that of 2009. This prompted ERAÜ to demand that the company increase the wages of all railway workers. ERAÜ argued that the increased profits were partly the result of efforts made by all the employees, but mainly due to the redundancies.

However, Estonian Railways said:

• it had paid bonuses to all its employees in previous years;

• it had maintained wage levels in time of recession, while other companies had been cutting pay;

• it was increasing the wages of the 300 lowest paid workers by 20% in 2011;

• the number of executive personnel has been decreased;

• the salary of executive personnel has been reduced.

Still, ERAÜ demanded a 5% wage increase, to take effect from March 2011 and an additional wage increase after six months. If the company refused to comply, the union was prepared to organise pickets or arrange strike action.

New collective agreement

On 25 April, the Estonian Railways and ERAÜ concluded a new collective agreement that will increase workers’ pay. Bonuses will be increased from 3% to 7.5%. Extra pay will be given to employees whose workload has increased due to the redundancies.

Reactions

A spokesperson for ERAÜ said the union was satisfied with the collective agreement, adding that the strike threats may have had an impact on the company. He also admitted that, due to the increased personnel flow, it is difficult to find employees and therefore the Estonian Railways understood the need to increase wages. Estonian Railways commented that the overall wage level in the company is higher than that in neighbouring countries. A spokesperson for Estonian Railways added that the company is ready to increase the wages further in the event of good economic results.

Commentary

There has been increased activity in concluding collective agreements. In February a new collective agreement for transport workers’ was signed (EE1102029I) and in April a new collective agreement for miners was concluded (EE1105019I). Other collective agreements are under negotiation. Social partners have also started national minimum wage negotiations.

Liina Osila and Kirsti Nurmela, PRAXIS Centre for Policy Studies