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This week, the so-called Fourth Railway Package was at the centre of the discussions in the Transport Committee of the European Parliament. In a further step towards liberalisation, Rail passenger transport shall now also be opened for the market. AK EUROPA, together with Trade Union for Transport, Commerce and Service Workers vida and the European Office of the Austrian Trade Union Federation ÖGB took the occasion to invite to a panel discussion last Monday. At the focus of the discussion: What impact will the plans of the Commission have on employees and passengers?

The European Commission has pursued a liberalisation strategy for rail services, which bit by bit replaces socio-political with economic goals, for many years. Now it also has rail passenger transport in its sight, in respect of which the Commission plans to introduce mandatory tendering for individual routes. The aim is clear: private companies cherry-pick the profitable routes, whilst public rail will be left with those routes, which do not generate or profit but might even incur losses. The bottom line is that this liberalisation produces predominantly one winner - private rail operators.

Study: rail liberalisation negative for employees, passengers and the public sector

A new study on the liberalisation of rail passenger transport presented by AK, vida, Trade Union for Transport, Commerce and Service Workers, the Austrian Association of Cities and Towns and the Austrian Association for Public and Social Economy clearly shows that in countries, where individual routes have already been tendered, the situation for passengers, employees and state has worsened. The study was based on the situation in Sweden, Germany and Great Britain, where salaries and working conditions have deteriorated. Passengers experience considerable losses of quality through rail liberalisation. Rail tickets too have become significantly more expensive. In addition, the public sector has to cope with additional costs as profit-making routes are no longer available and it is left with only loss-making lines.  

AK/vida/ÖGB panel discussion depicts consequences of rail liberalisation policy

Within the scope of a panel discussion, AK, vida and ÖGB once again drew attention to the negative impact of rail liberalisation policy and asked MEPs for their opinion. Unfortunately, MEPs representing the European People’s Party, the Liberals and the Greens declined the invitation for a variety of reasons. However, the Social Democrat MEP Saïd El Khadraoui was available to discuss the issue with Sabine Trier of the European Transport Workers' Federation, Trevor Garrod of the European Passengers' Federation und Heinz Högelsberger of vida.

Saïd El Khadraoui: ensuring social standards for employees and passenger rights

Within the scope of the discussion, MEP El Khadraoui, one of the rapporteurs of the Fourth Railway Package in the European Parliament, asked for caution concerning opening the market in the railway sector. One had to strike a balance and not only focus on economic wishes said the Social Democrat. The MEP supported the option that rail passenger transport may be provided directly from the public sector (known in jargon as “direct award”) and not, as the Commission favours, had to invite private operators to tender as well. He also regards the complete separation of infrastructure and transport service as not sensible. The social standards for employees and passenger rights had to be safeguarded, said El Khadraoui. A licence for operating a company should only be issued if the operator committed itself to complying with collective agreements.

Sabine Trier: Commission proposal is pure ideology

The EU Commission wanted to implement the current package only for the sake of reducing costs, criticised the Deputy General Secretary at the European Transport Workers' Federation (ETF). Current experience had shown that when it came to awarding contracts, the criteria were based to 70 percent on price and only to 30 percent on quality. However, the current proposal would not refer anywhere to the added value of public service, which was even embedded in EU Agreements. On the contrary, every single Railway Package had gradually pecked away at employees’ rights and social standards. Trier reminded, that as early as 1998 the European Parliament had demanded in a resolution that every step towards liberalisation had to be followed by evaluating the impact on the workforce. However, this never happened - even after three packages. Outsourcing would often create two classes of employees, those with good and those with poor working conditions, described Trier the situation. Hence, one of the ETF demands is a regulation concerning the transition of employees to ensure that they will work under the same conditions for their new employer. This shall be mandatory for employers; employees, however, shall be given a choice.

Trevor Garrod: withdraw licence from operators if consumers are not satisfied

The Chairman of the European Passengers' Federation, Trevor Garrod, pointed out that different Member States had different circumstances and that therefore a one-for-all solution, as proposed by the Commission with the Fourth Railway Package, had to be viewed with a lot of scepticism. The main aspect from the point of view of passengers would be to adhere to clear criteria, such as lower prices or higher standards of quality. The current fragmentation of the rail sector would also hinder the implementation of employees’ rights in this sector. In Garrod’s general opinion, the strategy pursued by the Commission to separate networks and operators was alright as long as one would understand that the work in the railway sector was based on teamwork. Garrod tried to cement his theory at the example of Northern Ireland, where such separation was not in place, that the principle of so-called “unbundling” (i.e. the separation of network and operation), which had been proposed by the Commission, might not have any benefits under certain circumstances, that it might, however, make sense, if it was not imposed on all countries in a rather unreflecting manner. In any case, if mandatory tendering shall be binding, it should also be ensured that those companies, wishing to take part in the tender, shall be obliged to consult consumer protection organisations prior to their application. It should be possible to withdraw the licence from companies that have won a tender, if it transpires that consumers are not happy. It should also be possible for current operators to participate in a tender, said Garrod.

Heinz Högelsberger: more cooperation than competition required

In the opinion of Heinz Högelsberger, expert at the Austrian Trade Union for Transport, Commerce and Service Workers vida, the Fourth Railway Package of the Commission does once again only aim at liberalising and deregulating rail transport: rail companies were supposed to be able to compete throughout Europe; however, internal market and competitive acumen were the only guideline for this very delicate transport sector, which also had to provide public services - in particular public transport. Instead of competition, more cooperation and collaboration was required between providers - also in the interest of consumers. The proposal of the Commission carries the risk that the social rights of employees and their wages would in the long-term be regarded as competitive disadvantage and that as a result - similar to European bus and HGV drivers - wage dumping would become an unwelcome consequence in Europe. Also because personnel costs would be the only element of expenditure for a private operator, where one could be cheaper than other providers.  The trade unionist demanded that employees who had to change from one to another competing employer had to have the opportunity of taking the same contractual conditions with them. What was needed instead of further steps towards liberalisation was strong political support and concepts, to strengthen rail transport compared to road transport. Today, good public services needed three things: well trained and socially secure employees, efficient and cooperative planning and organisation of the transport system and finally proper funding to fulfil these tasks and secure universal access to these services.

How will the negotiations continue?

The vote on the Fourth Railway Package in the Transport Committee has been planned for autumn; it shall be on the agenda of the plenum in early 2014. Even if the European Parliament should vote in favour of a mandatory tendering of rail passenger transport - which can be assumed from today’s point of view, this is nevertheless not the last word: agreement must also be reached in the Council; hence an early decision is still a long way off.

Further information:

Study on economic impact of rail liberalisation

Factsheet of AK and vida on the Liberalisation of Rail passenger transports

AK EUROPA Position paper on the Fourth Railway Package