Employees oppose privatisation plan for Olympic Airways

In November 2008, the Greek parliament approved a government plan to privatise Olympic Airways. The plan stipulates that Olympic Airways will be split into three separate companies and sold to private buyers, with a smaller successor airline likely to emerge. The employees will be offered voluntary departure with financial benefits and transfers to other parts of the public sector. Employees and unions at Olympic Airways strongly oppose the privatisation plan.

Privatisation plan

A government plan for the privatisation of Olympic Airways (GR0801049I) was approved by the European Commission in September 2008 and the relevant legislation was approved by the Greek parliament in early November.

When the Minister of Transport, Sotiris Chatzigakis, presented the privatisation plan, he gave a series of reasons why the regime under which Olympic Airways operates must change. Minister Chatzigakis highlighted that Olympic Airways is the only airline in the European Union that is 100% state owned. In addition, it is the company that incurs most losses in comparison with its size, since it generates a deficit equal to one million euros a day with its accumulated losses exceeding €2.6 billion. However, the Minister stressed that the needs of remote Greek islands will be safeguarded in the privatisation process.

The plan provides for the transfer of the assets of Olympic Airways and Olympic Airways Services to three different companies that have either already been set up or will be set up specifically for this purpose:

  • Pantheon is a company that has already been established and is controlled by the state. This will be the successor of Olympic Airways, will undertake flight operations and will acquire the assets of Olympic Airways including the right to use the Olympic name and logo and significant flight slots;
  • new company will be set up that will undertake ground handling services and will acquire the relevant assets of Olympic Airways Services;
  • third company will be established that will acquire the aircraft maintenance and repair assets of Olympic Airways Services.

The procedure for the acquisition by the three companies of the assets of Olympic Airways and Olympic Airways-Services will start once private investors are selected. A number of other airlines, low-cost carriers and investment funds have already expressed their interest in all three companies, in the context of a tendering process being organised by the government. The denationalisation plan includes a brief transitional period during which the Greek state will hold 51% of the share capital of the three companies and the private sector will have a 49% stake. The new investor will be selected by the end of 2008. It is expected that the whole denationalisation will have been completed by spring 2009, when the buyers will acquire all the shares in the three companies.

Provisions for the company’s employees

Pursuant to the privatisation plan, a voluntary departure scheme will be open to the 4,593 permanent employees of Olympic Airways (as was the case in previous privatisations). This plan includes favourable retirement regulations for all employees hired before 1993. In addition, all permanent employees will be able to choose to work in another public service or state-controlled entity. According to the Ministry of Transport, 14,317 such potential positions have already been identified, of which 3,862 are in agencies supervised by the ministry. If pay in the new job is lower than the worker's wages when employed at Olympic Airways, a monthly supplement of up to €500 will be provided.

Permanent employees who leave Olympic Airways will receive income support for a transitional period of up to one year. During the first four months, they will receive monthly remuneration corresponding to their previous regular monthly pay. During the next four months, they will receive 70% of their regular monthly pay, then 60% for a further two months and 50% for the last two months.

In addition, a lump-sum ‘social support’ payment will be provided to permanent employees who leave Olympic Airways, as follows:

  • employees with up to one year’s service with the company, this amount will stand at one month’s regular pay plus one-sixth thereof;
  • for those with one to four years’ service, two months’ regular pay plus one-sixth thereof;
  • for those with four to six years’ service, three months’ regular pay plus one-sixth thereof;
  • for those with six to eight years’ service, four months’ regular pay plus one-sixth thereof;
  • for those with eight to 10 years’ service, five months’ regular pay plus one-sixth thereof;
  • for those with 10 years’ service, six months’ regular pay plus one-sixth thereof; and
  • for those with more than 10 years’ service, an additional month’s pay per additional year of service plus one-sixth thereof.

Permanent employees will also be eligible for employment in the three new companies.

As regards seasonal workers, these will receive credit for their past service in Olympic Airways if they apply for public sector jobs. In addition, the public Manpower Employment Organisation will establish a special three-year programme to subsidise employers that recruit former Olympic Airways seasonal workers. The subsidy will amount to €25 per working day and employers will be obliged to employ the worker concerned for at least a year.

Olympic Airways employees will not be transferred to the three new companies when they start operating. The buyers will be free to choose the employment levels of the companies without any legal or financial obligations, all of which will be assumed by the Greek state. Based on reports from international companies that have provided consulting services to successive Greek governments in their various attempts to privatise Olympic Airways, it is estimated that the new companies will employ about 2,000 ex-Olympic Airways employees. The remaining workers will participate in the voluntary departure scheme and transfers to other public services that have been elaborated by the government.

According to the minister of transport, the cost of the measures concerning the company’s workers approaches €1.3 billion.

Workers respond with protests

Olympic Airways employees have fiercely opposed the government’s measures.

There are two main points of dispute. First, the employees fear that the successor to Olympic Airways will be a low-cost small company. Second, trade unions strongly oppose the fact that the buyers will be free to decide on the number of employees in the new companies. They claim that the provisions of Council Directive 98/50/EC on business transfers, as transposed into Greek law by way of Presidential Decree 178/2002, are not being applied. Under this legislation, where an activity is transferred from one company to another, the employees linked with the activity are transferred to the new entity under the same employment conditions in the previous company and any change in labour relations may occur only following negotiations. The trade unions at Olympic Airways have not consented to any change in labour relations and warn that they will have recourse to the courts.

Olympic Airways staff have been protesting over the plans. On 18 September, a group of technicians occupied the runway at Athens International Airport and prevented aircraft from moving for around 15 minutes. In addition, the offices of the company’s management at the airport were occupied. Furthermore, on 8 October, the General Confederation of Greek Labour (Γενική Συνομοσπονδία Εργατών Ελλάδας, GSEE) protested against the privatisation of public corporations and held a 24-hour strike in all state-controlled entities.

Commentary

The privatisation of Olympic Airways is a top priority in the government’s financial policy. Despite the plan’s provisions for employees, the option provided to the successor companies to make a substantial change in labour relations before any collective bargaining is held with trade unions could lead to court cases, which might result in the amendment or cancellation of the government’s plans. Therefore, the Olympic Airways privatisation plan arguably cannot be sustainable without any dialogue between the company and employees or any guarantees provided by potential buyers on maintaining the main aspects of labour relations governing the company.

Stathis Tikos, Labour Institute of Greek General Confederation of Labour (INE/GSEE)

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