Volán bus unions conclude agreement with government

Trade unions active in long-distance Volán bus companies have signed a framework agreement with the State Asset Management Company, representing the government. Under the agreement, industrial relations conflict must be averted up until the end of 2010. To this end, the government extended the company’s monopoly for providing public transport services until 2016. Potential competitors of Volán companies mounted a strong attack against the government’s decision.

Background

At the end of the summer of 2009, the government announced that it would undertake the restructuring of the Hungarian public transport system with immediate effect. According to the plans (HU1001029I), railway lines that are less frequently used would be closed and substituted by bus services, provided by Volán companies. This would result in savings of some HUF 70 billion (about €258 million as at 26 January 2010) in the sector.

The Volán Trade Unions’ Cooperation Forum (Volán Szakszervezetek Együttműködési Fóruma, VSZEF) subsequently formed a strike committee to reportedly ensure leverage in the negotiations with the government, which had failed to reply to their contact. The representative of VSZEF, Antal Hoffmann, added that four trade unions had joined the strike committee, covering about 90% of all employees in the company.

Details of agreement

After several rounds of difficult negotiations lasting several weeks, a framework agreement was concluded on 26 October 2009 regarding the restructuring of Hungary’s interurban public transport network. The agreement was signed by the trade unions representing workers in long-distance bus companies and by the Hungarian State Asset Management Company (Magyar Nemzeti Vagyonkezelő Zrt, MNV), which was representing the government. The parties agreed that the rationalisation of the transport network would not imply job losses or the deterioration of working conditions. They also agreed that the government would extend the currently valid contracts on interurban public transport services until the end of 2016 and that the necessary amendment of the contracts would be made by 3 December 2009.

According to the agreement’s no-strike clause, industrial relations peace would be maintained at least until the end of 2010. The signatories of the accord also agreed that the majority ownership of Volán companies would remain in state hands and that the parties would regularly hold consultations during the implementation of the government’s envisaged restructuring programme.

According to a statement issued by MNV, an agreement concluded previously on wage increases for 2009 and 2010 will be implemented. Under another stipulation of the agreement, Volán companies will no longer be obliged to hire subcontractors for at least 5% of their services in interurban public transport, and company-level trade unions should be consulted on future subcontracting agreements. The clause prescribing the subcontracting of 5% to 30% of services had initially been introduced in order to prepare the sector for the opening up of the market. However, trade unions claim that this objective had only partially been met. This stipulation created lower conditions for workers employed by subcontractors that undercut trade unions’ positions.

Reactions to agreement

The Chief Executive Officer (CEO) of MNV, Miklós Kamarás, emphasised that the agreement provides the opportunity for further and lasting cooperation. He pointed out that the accord had finally put an end to the strike threat.

However, some experts considered the agreement as unacceptable and even absurd. They also commented that the Volán lobby seems to be forming the transport policy of Hungary. The former state secretary of the Ministry of Transport, Telecommunications and Energy (Közlekedési, Hírközlési és Energiaügyi Minisztérium, KHEM), Balázs Felsmann, remarked that the CEO of MNV had essentially promised the companies under the authority of MNV that he would ensure that the law on bus transport would also be amended. Not only was the extension of the monopoly unjustifiable, Mr Felsmann pointed out, it will also delay the opening up of the market, giving smaller private bus companies no chance to enter the market.

The government Commissioner for Public Transport, Károly Antali, also criticised the contract. Mr Antali mentioned that the government had recently declined the offer of Orangeways, a private bus carrier, to launch five routes with premium service in Hungary. He suggested that the state-owned Volán companies’ lobby might be behind this decision.

Commentary

Although the agreement was formally concluded under the strike law, the public had not been informed about the strike threat before the accord was announced. This is particularly noteworthy in light of the simultaneous conflict underway in the railways sector, where the government is faced with highly strike-prone trade unions. Another peculiarity of the agreement is that its real winners – the management of Volán companies – are not among the signatories. The trade unions have undoubtedly taken a risky move in helping their companies, as the peace obligation may prevent them from achieving a fair agreement on wage increases for 2010.

The timing of the agreement is also significant. According to Regulation (EC) No. 1370/2007 of 23 October 2007 on public passenger transport services by rail and by road, countries that fail to undertake initiatives to open up their transport market by 2014 will not only have to face bureaucratic obligations, but will also prevent their own carriers from becoming international competitors. Otherwise, the regulation allows the Member States to postpone the opening up of markets until 3 December 2019. This regulation was due to enter into force on 3 December 2009, which is why the agreement included the same deadline for the modification of the public service contracts.

Máté Komiljovics, Institute for Political Science, Hungarian Academy of Sciences

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