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BackBy launching the Fourth Railway Package, the European Commission has now sounded the bell for the next round with regard to liberalising rail transport. The probably most controversial issue in the new legislative package is the mandatory tendering of public transport services. This would mean that rail transport services, such as commuter trains would have to be put out to tender and would no longer be allowed to be operated by the public sector and its enterprises. Discussions so far have given only little consideration to the reproach by experts that the planned mandatory tendering would take place at the expense of employees and lead to lower wages and poorer working conditions. An initial hearing on the Fourth Railway Package has now taken place in the recent Transport Committee meeting of the European Parliament. However, the hearing revealed that many MEPs attach particular value to economic interests, but that the concerns of employees only find support with a minority.
Given the fact that the current Regulation, which gives the public sector the freedom to choose whether it wants to provide public rail transport itself or whether it wants to put it out to tender to private enterprises, has only been in force for three years, it is difficult to understand why the European Commission has published a new draft proposal on opening the market for domestic passenger rail services in the first place. However, the reason for the recent attempt of the Commission is obviously the fact that EU civil servants were not able to gather support for the already then made proposal concerning mandatory tendering.
Sabine Trier, Deputy General Secretary of the European Transport Workers' Federation (ETF), warned that mandatory tendering would mainly take place at the expense of employees, as in almost all cases contracts would be awarded to the cheapest provider. The only varying operating costs would be personnel expenses, whilst most of the other cost factors would be fixed. Enterprises, which had been employing more experienced and thereby more expensive personnel for many years would be disadvantaged in comparison to enterprises, which would just recruit new personnel who they would pay lower wages. This would disadvantage in particular older employees, who would, because of the artificial competition, intended by the European Commission, have fewer chances to find employment also in this sector. This would also contradict the target of the Commission itself, to keep employees in work as long as possible.
This problem could be avoided by obliging new operators to take over current personnel to existing conditions. But it is exactly this, which is not part of the intended reform. According to the Commission, standards concerning personnel may be integrated in the tender, but it is not compulsory to do so. This is completely different with regard to rolling stock: if a private company, once the contract for operating a line has been expired, is no longer awarded the contract, the state shall be obliged to assume the residual value risk for the trains (rolling stock) – which means, that in the worst case the public sector resp. the tax payer will be left with the costs of the private railway operator. This is liberalisation à la Commission: profits fill the coffers of private companies, whilst the bill for losses is footed by the public. It is exactly this factor, which Sabine Trier addresses: obviously this is only about cherry picking; apart from that, “competition” would only take place on profitable routes. Peripheral regions would run the risk of not being serviced at all in future because they would not generate any profit, criticised the ETF Deputy General Secretary.
Another view on the Commission Package was provided by Eric Forster, chairman of Westbahn, who had also been invited to the hearing. Currently 80 % of transport routes resp. 71 million kilometres would be awarded directly to Austrian Federal Railways ÖBB; there was no tendering. Forster is clearly in favour of the draft proposal. He explains, however, that in particular the fluctuating costs with regard to infrastructure charges would be a disaster for private companies.
Listening to the statement of Lord Tony Berkeley, chairman of Rail Freight Group, one might think rail transport in Great Britain would resemble the Land of Cockaigne. According to him, the privatisation of the railway in the United Kingdom had been a success; rail transport in Great Britain for example had increased by 60 %. Rail transport was in need of many enterprises; competition had to be strengthened; infrastructure and operation had to be completely separated. Rail had to be able to compete with road and this was only possible if rail operators would engage in competition.
However, some MEPs brought Lord Berkeley down to earth again: Jaromír Kohlíček of the European Left pointed out that privatisation in Great Britain had resulted in a complete collapse of the railway and that one was back to square one. According to Kohlíček, only a very small number of routes, such as Vienna – Linz, would be economically interesting; most other lines were simply not attractive enough for private operators; everybody would just indulge in “cherry picking”. This would put public transport at risk. Isabelle Durant of the Belgian Greens even talked of the apocalyptic conditions the privatised British railway had to go through. Apart from that, the texts of the Commission would be biased; any splitting of the rail would be a significant disadvantage. However, her faction colleague from Germany, Michael Cramer, has a completely different opinion: of course, he too would be against cherry picking and social dumping; however, freight transport had shown how much growth market opening would bring compared to a closed market.
Some Conservative MEPs voiced the opinion that the new EU laws would not be detrimental to employees. Everybody, apart from the trade unions, would regard the proposals of the Commission as a step in the right direction.
However, the Social Democrat MEPs Saïd El Khadraoui sees it differently. An approach would be necessary, which not only aims at making profits, but which would also take minor routes, public service contracts and the over 700,000 employees working in the sector into account. He doubts that this proposal results in an economic balance and sees the danger that the legislative proposal would in the end replace public monopolies with an oligopoly structure. According to El Khadraoui, the Commission proposal has unfortunately only little to say on the social dimension.
The draft reports on the individual legislative proposals from the Fourth Railway Package shall have been submitted by 9 July. Although the previous 3 railway packages have only managed to weaken rail transport and resulted in the fact that the rail lost market shares to the road, there is hardly any indication that the liberalisation course will change anything with regard to railway transport. However, the position of MEPs will only become clear once their votes have been cast in the Transport Committee. Voting in the Transport Committee has been scheduled for end November and in the plenum for January 2014.
Sabine Trier, Deputy General Secretary of the European Transport Workers' Federation (ETF), warned that mandatory tendering would mainly take place at the expense of employees, as in almost all cases contracts would be awarded to the cheapest provider. The only varying operating costs would be personnel expenses, whilst most of the other cost factors would be fixed. Enterprises, which had been employing more experienced and thereby more expensive personnel for many years would be disadvantaged in comparison to enterprises, which would just recruit new personnel who they would pay lower wages. This would disadvantage in particular older employees, who would, because of the artificial competition, intended by the European Commission, have fewer chances to find employment also in this sector. This would also contradict the target of the Commission itself, to keep employees in work as long as possible.
This problem could be avoided by obliging new operators to take over current personnel to existing conditions. But it is exactly this, which is not part of the intended reform. According to the Commission, standards concerning personnel may be integrated in the tender, but it is not compulsory to do so. This is completely different with regard to rolling stock: if a private company, once the contract for operating a line has been expired, is no longer awarded the contract, the state shall be obliged to assume the residual value risk for the trains (rolling stock) – which means, that in the worst case the public sector resp. the tax payer will be left with the costs of the private railway operator. This is liberalisation à la Commission: profits fill the coffers of private companies, whilst the bill for losses is footed by the public. It is exactly this factor, which Sabine Trier addresses: obviously this is only about cherry picking; apart from that, “competition” would only take place on profitable routes. Peripheral regions would run the risk of not being serviced at all in future because they would not generate any profit, criticised the ETF Deputy General Secretary.
Another view on the Commission Package was provided by Eric Forster, chairman of Westbahn, who had also been invited to the hearing. Currently 80 % of transport routes resp. 71 million kilometres would be awarded directly to Austrian Federal Railways ÖBB; there was no tendering. Forster is clearly in favour of the draft proposal. He explains, however, that in particular the fluctuating costs with regard to infrastructure charges would be a disaster for private companies.
Listening to the statement of Lord Tony Berkeley, chairman of Rail Freight Group, one might think rail transport in Great Britain would resemble the Land of Cockaigne. According to him, the privatisation of the railway in the United Kingdom had been a success; rail transport in Great Britain for example had increased by 60 %. Rail transport was in need of many enterprises; competition had to be strengthened; infrastructure and operation had to be completely separated. Rail had to be able to compete with road and this was only possible if rail operators would engage in competition.
However, some MEPs brought Lord Berkeley down to earth again: Jaromír Kohlíček of the European Left pointed out that privatisation in Great Britain had resulted in a complete collapse of the railway and that one was back to square one. According to Kohlíček, only a very small number of routes, such as Vienna – Linz, would be economically interesting; most other lines were simply not attractive enough for private operators; everybody would just indulge in “cherry picking”. This would put public transport at risk. Isabelle Durant of the Belgian Greens even talked of the apocalyptic conditions the privatised British railway had to go through. Apart from that, the texts of the Commission would be biased; any splitting of the rail would be a significant disadvantage. However, her faction colleague from Germany, Michael Cramer, has a completely different opinion: of course, he too would be against cherry picking and social dumping; however, freight transport had shown how much growth market opening would bring compared to a closed market.
Some Conservative MEPs voiced the opinion that the new EU laws would not be detrimental to employees. Everybody, apart from the trade unions, would regard the proposals of the Commission as a step in the right direction.
However, the Social Democrat MEPs Saïd El Khadraoui sees it differently. An approach would be necessary, which not only aims at making profits, but which would also take minor routes, public service contracts and the over 700,000 employees working in the sector into account. He doubts that this proposal results in an economic balance and sees the danger that the legislative proposal would in the end replace public monopolies with an oligopoly structure. According to El Khadraoui, the Commission proposal has unfortunately only little to say on the social dimension.
The draft reports on the individual legislative proposals from the Fourth Railway Package shall have been submitted by 9 July. Although the previous 3 railway packages have only managed to weaken rail transport and resulted in the fact that the rail lost market shares to the road, there is hardly any indication that the liberalisation course will change anything with regard to railway transport. However, the position of MEPs will only become clear once their votes have been cast in the Transport Committee. Voting in the Transport Committee has been scheduled for end November and in the plenum for January 2014.