Unions reject plans to stabilise public transport company

The Czech Republic’s ailing Prague Public Transport Company has appointed a new managing director who has announced measures aimed at stabilising the business. Jaroslav Ďuriš intends to freeze the wages of the company's 10,500 employees as part of a debt-reduction strategy. Unions have protested, saying that unfavourable long-term contracts with suppliers are the real source of the company's financial difficulties and the priority should be to renegotiate them.

Background

The Prague Public Transport Company (DPP) is a joint-stock company in the Czech Republic. Its sole shareholder is the city of Prague. DPP provides a range of heavily subsidised public transport services in the capital city including the three-line metro system, trams and buses. It also runs a funicular originally opened in 1891 linking the Malá Strana district with the top of Petřín hill.

Milan Křístek resigned as DPP’s Managing Director on 26 September 2013. Křístek’s relations with Prague City Council had been strained, and he had lacked support for his plans to revive the company’s fortunes by increasing ticket prices. He was replaced by Jaroslav Ďuriš, previously Director of the city of České Budějovice’s Public Transport Company.

New MD’s proposals

Ďuriš took over a company beset with financial problems. Its difficulties have been blamed on unfavourable long-term contracts agreed in 2010 and 2011. Ďuriš also inherited problems caused by high ticket-printing costs, poor fuel purchasing, and expensive deals for the purchase of trams. All this resulted in DPP facing a huge financial burden. The main goal of the new Managing Director was to stabilise the company.

The DPP has just under 10,500 staff who earn an average monthly salary of CZK 31,000 (€1,211 as at 15 October 2013). Average wages in Prague were CZK 32,602 (€1,273) and CZK 24,953 (€975) across the rest of the Czech Republic in the second quarter of 2013.

Ďuriš’s key proposals included the introduction of higher fines for fare evaders, a revision of the current system of fare discounts to pensioners, schoolchildren and people with disabilities, and a wage freeze for employees. Trade unions are fiercely opposed to any wage freeze.

Trade union response

President of the local trade union organisation of the Trade Union of Transport in Prague – Motol (ZO OSD Motol), Jiří Zabloudil, said he did not see major problems in the company, other than the issue of ‘unfair’ contracts. He urged:

Review the old economically disadvantageous contracts through which some tens of million crowns have been lost; if we do that and see that financial resources are lacking, then we can sit down and talk about extra pay.

Ďuriš disagreed, saying he believed another problem within the company was the workers’ current collective agreement. He described the agreement as a total victory for trade unions over the management. The agreement to which Ďuriš refers is valid until the end of 2015 and links wage rises to inflation.

Solutions

Unions have come up with their own solutions to the company’s financial problems. Zabloudil not only believes old contracts should be renegotiated, but says public transport should be made more attractive to the middle classes. In response to the Duriš plan to increase fines for fare evaders, Zabloudil said: ‘Middle class passengers do pay on public transport, unlike people on low incomes. We can impose and increase fines, but it is still difficult to enforce them by law.’

Ďuriš has said he does not want to consider job cuts or any increase in passenger fares. Fare rises would, in any case, need the consent of the City of Prague as owner of the company. Instead Ďuriš has pointed out that the current system of discounts in public transport – especially for schoolchildren, students, senior citizens and people with disabilities – is too wide-ranging and needs to be reviewed. He admitted, though, that this would take some time.

Commentary

DPP’s current contract with Škoda Transportation for the supply of new trams is a big financial burden for the company. The Mayor of Prague, Tomáš Hudeček, has previously said that if DPP does not resolve the issues surrounding this multi-billion euro contract for new trams, it would be threatened with bankruptcy.

A solution needs to be found within the next six months, otherwise the company will probably have to start selling off assets.

Ďuriš intends to look into the situation and negotiate improved terms for the contract. However, he said: ‘For me, this is one of the major tasks, but it will last definitely more than half a year.’

Soňa Veverková, Research Institute for Labour and Social Affairs

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