Restructuring of Austrian Federal Railways leads to strikes

November 2003 saw major strikes organised by the GdE railworkers’ trade union at Austrian Federal Railways (ÖBB) - the largest-scale industrial action at the state-owned company since the Second World War. The action was a protest against the government’s plans for restructuring and splitting up ÖBB, which include changes to the railworkers' current statutory service regulations. The strike was ended by agreement to postpone possible changes to the service regulations, with management and GdE to negotiate on this issue by April 2004. The other components of the reform were enacted by the parliament in December 2003 despite criticism from many quarters.

Workers at Austrian Federal Railways (Österreichische Bundesbahnen, ÖBB) went on strike on 4 November 2003 and from 12 to 14 November 2003 (including a continuous period of 66 hours). These strikes, which followed a two-week overtime ban which started in mid-October, constituted the largest-scale industrial action at the company since 1945.

The strike action was called by the Union of Railway Employees (Gewerkschaft der Eisenbahner, GdE) in protest against two draft bills, which were adopted by the coalition cabinet of the conservative People’s Party (Österreichische Volkspartei, ÖVP) and the populist Freedom Party (Freiheitliche Partei Österreichs, FPÖ) on 11 November 2003. The government's aim is completely to restructure the state-owned ÖBB by splitting it up into a number of subcompanies, and to replace the current public service employment regulations applying to railway employees with private law employment relationships, similar to those in the private sector. Despite criticism from the parliamentary opposition, the trade unions, some regional (Länder) governments and, most recently, the Court of Audit (Rechnungshof, RH), the government did not show any willingness to reconsider its plans. In response to this, GdE called strikes.

The strikes led to the cancellation of all ÖBB's 7,500 daily services, affecting about 720,000 passengers per day. When important industries were threatened with extensive damage as a result of transportation bottlenecks, business organisations urged the government to return to negotiations. On 14 November 2003, the railworkers returned to work after the government and GdE agreed to postpone any decision on changes to the ÖBB employees' service regulations until spring 2004. However, despite GdE’s threat of further action, the government’s plan for restructuring ÖBB was - after slight changes - finally passed by parliament on 4 December 2003, supported by the governing ÖVP and FPÖ only.

The government’s plans

Since it first came to office in February 2000, the ÖVP-FPÖ coalition government has launched several initiatives to restructure the state-owned ÖBB. The government’s main aim has been to make the company more modern and competitive, and thereby to reduce the financial burden on the state arising from its legal obligation to meet ÖBB’s deficits (AT0302201N andAT0308202F). In early 2003, the ÖVP presented a plan to transform ÖBB into a holding company at the head of several independent and specialised enterprises. These plans to split up the company were strongly opposed by GdE, which argued that this would damage the performance of ÖBB and pave the way for the privatisation and sell-off of (parts of) the company.

Regardless of this opposition, in autumn 2003 the government reactivated these plans and presented a draft reform at the beginning of October. This provides for a completely new structure, with ÖBB headed by a fully state-owned holding company without any operating tasks. The actual operating business will be performed by four joint-stock companies responsible for: passenger traffic; rail cargo; planning, engineering and construction; and maintenance and business operation. These companies are designated as 100% subsidiaries of the holding company but will operate independently and on their own responsibility. Moreover, a new'personnel management agency' will be established to retrain workers and hire them out to other companies. This agency, it is planned, will hire out up to 5,000 employees (of a total of current ÖBB workforce of about 47,000). In addition, some 7,000 employees are slated to leave the company through retirement by 2010. Another feature of the plan is a cut in the influence of staff representation bodies (which at present enjoy special rights, in particular in personnel matters) to a level equivalent to that of works councils in the private sector (AT0309203T).

In addition to these restructuring plans, the government presented a draft Federal Railways Service Regulation Act (ÖBB-Dienstrechtsgesetz), whereby railworkers’ current protection against dismissal would be relaxed, and some other employment terms which are more favourable than private sector standards (eg automatic biannual wage increases and extended sickness benefits) would be abolished. The government argued that these changes in the present service regulations are economically justified as well as in line with the Austrian Constitution. This view is questioned by organised labour and a number of experts.

Criticism of restructuring plans

The government’s plans to restructure ÖBB and unilaterally to amend its present public service employment regulations have met with criticism not only from trade unions and the parliamentary opposition, but also from ÖBB management and the Court of Audit (RH). As regards the planned splitting-up of the company, experts question the expedience of creating a set of independent enterprises under the umbrella of a rather weak holding company that lacks capacities for strategic action. The RH argues that this structure is likely to result in a splitting-up of responsibilities that impedes the pursuit of a coherent, long-term business strategy. In particular, the planned establishment of two separate companies for infrastructure - one responsible for planning, engineering and construction and the other for maintenance and business operation - is criticised by the RH, on the grounds that current organisational'synergies' may be lost and parallel management structures will have to be established. Furthermore, the RH stated that the bill on ÖBB’s restructuring completely lacked a detailed plan on how to finance the company in future and how to guarantee long-term savings for the state. The government has announced that it will save EUR 1 billion by 2010 by implementing its ÖBB reform.

ÖBB management has also questioned some elements of the restructuring plan. Similar to that of the RH, this criticism concentrates on the planned splitting-up of the company’s infrastructure into two separate sub-units. According to EU law and national public tender regulations, state-owned enterprises such as ÖBB have to call for Europe-wide tenders when they want to place orders. By subdividing the ÖBB infrastructure into two independent joint-stock companies, the ÖBB operating enterprise may be obliged to call for Europe-wide tenders instead of directly placing its orders with the ÖBB planning, engineering and construction company, when it comes to laying new tracks. If a'third' company is awarded the contract to build tracks, the ÖBB planning, engineering and construction company will be left with its personnel and costs but without having any orders. Moreover, management has criticised the plan that the ÖBB maintenance and business operating company will have neither its own production facilities nor its own assets. Hence, it will be fully dependent on the ÖBB planning, engineering and construction company (which would be subsidised by the state), since the latter will lease the infrastructure (ie the tracks and other facilities) to the former.

The strongest objections to the government’s restructuring plans have been formulated by trade unions. They consider the division of the company as a preparation for its privatisation and criticise the fact that the plans do not oblige the state continuously to subsidise the maintenance and construction of the railway infrastructure. Since each of the future subcompanies will be obliged strictly to run their own operations instead of optimising their operations together, any strategic transport policy which takes into account the interests of the stakeholders (ie the passengers, the local and regional governments, the clients in the goods transport business, the employees etc) will face severe difficulties, it is claimed. GdE argues that such restructuring will result in far higher tariffs for the transportation of both people and goods in the short run and will thus damage the railways' competitiveness in relation to road transport.

Draft ÖBB Service Regulations Act withdrawn

As mentioned above, the government also aims unilaterally to alter the present public service employment regulations which apply to railworkers by law. The government argues that, in the new ÖBB structure, the existing service regulations would contain too many privileges compared with'normal' employment contracts in the private sector and would thus be too expensive. However, several experts have questioned whether a unilateral change in the contracts would be compatible with the'principle of confidence' (Vertrauensschutz) according to the Austrian Constitution.

Currently, most railworkers (more than 90% of ÖBB employees) enjoy particular privileges with respect to their employment relationship, including permanent tenure carrying almost absolute protection against dismissal, while the other 10% have private-law contracts which were concluded after 1994. However, these privileges resulting from the'old', public sector service regulations were established as compensation for lower pay, the lack of any severance payments, and higher social insurance contributions compared with employees in the private sector. For that reason, the planned unilateral change in the ÖBB service regulations, which would abolish certain favourable provisions without granting higher pay, is questioned as being unlawful. Therefore, GdE has fiercely opposed the government’s reform plan.

In the face of the strikes in November 2003, the government agreed with the union to postpone any decision on the future ÖBB service employment regulations until the end of April 2004, if the railworkers immediately returned to work. An agreement concluded on 14 November 2003 stipulates that the government will delegate further negotiations on the future ÖBB service employment regulations to ÖBB management and GdE, while obliging them to reach a joint solution by the end of April 2004. If they fail to come to an agreement which is approved by the government by that deadline, the government will enact its own draft.


The government has questioned the legitimacy of the railworkers’ strike action by arguing that it was politically motivated. Moreover, the government has accused the unions of taking militant action negligently. There is neither a legal concept of a'politically motivated strike' in Austria nor indeed a codified national law governing the right to strike at all (AT0007225F). According to prevailing opinion, the right to take strike action derives from international provisions such as theCouncil of Europe'sConvention for the Protection of Human Rights and Fundamental Freedoms andEuropean Social Charter, and has not yet been specified by case law.

At any rate, the unions’ propensity to organise strikes and public protests has increased over the recent years. This reflects the tendency of the current government to move away from the traditional system of social partnership and to replace it with an approach that prefers unilaterally imposed policies over concerted action. Apart from the massive strike action responding to the far-reaching pensions reform in spring 2003 (AT0306201N), strikes have been organised in sectors and companies where the employees are highly unionised and thus able to defend their interests by means of industrial action - such as atPostbus (AT0206202N), in the public sector, atAustrian Airlines (AT0309202F) and at ÖBB. In general, however, the Austrian Trade Union Federation (Österreichischer Gewerkschaftsbund, ÖGB) continues to be a'corporatist player', prioritising the model of'social peace' rather than one of confrontation.

On 4 December 2003, the government pushed its legislation on ÖBB restructuring - the Federal Railways Structure Act,Bundesbahn-Strukturgesetz, BBSG) - through parliament against the votes of the opposition parties and against the protests of organised labour. This is remarkable, since the efficiency of the company’s division is questioned by many experts. Given the uncertainties about the reform’s efficiency, commentators have argued that one main goal of the reform is to weaken GdE’s position (as an umbrella union currently representing all railworkers). As the RH has criticised, the government has failed to show the economic advantages of the planned splitting-up of the company and to define its competitive edge within a highly liberalised EU railway market. In this respect, the unions argue that only a highly integrated railway company is able to pursue overall transport policy goals and to consider the stakeholders’ interests (which is vital for public-economy enterprises) - arguments to which the government’s representatives have never really responded. This gives rise to criticism that the government is willing to accept even the dismantling and privatisation of the company. Likewise, the government is criticised for prioritising short-term goals (ie easing the state’s financial burden) over long-term strategic views that also consider the public goals to be pursued by the railway system.

As regards the planned reform of the ÖBB service employment regulations, the agreement of November 2003 to postpone any changes until April 2004 has not resolved a number of fundamental problems. First, it remains uncertain whether any unilaterally imposed deterioration of the existing employment contracts would stand up to examination proceedings by the Constitutional Court (Verfassungsgerichtshof, VfGH), which the unions could be expected to call upon. Second, if ÖBB and GdE come to an agreement by April 2004, it remains unclear what will happen if any of the future independently-operating ÖBB companies refuse to accept this agreement. Another problem is that some or even most of the employees may refuse to accept the agreement. In principle, such a refusal is possible since voluntary agreements do not automatically replace existing public-service regulations. Rather, they may require explicit recognition by the employees from a legal point of view. At any rate, the government’s goal of saving EUR 100 million by introducing new service regulations will be difficult to achieve by means of a voluntary agreement, since neither GdE nor the railworkers themselves are willing to accept the abolition of favourable provisions as laid down in the current service regulations without any compensation. Therefore, as some commentators claims, the government may have invited GdE to negotiate a reform for the sole reason of ending the strike. After the enactment of the ÖBB reform in December 2003, they expect the government to introduce a reform of the railworkers’ service regulations by statute in a few months time. (Georg Adam, University of Vienna)

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