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Will freedom be fair?

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Page context: Home > Transport International Magazine > Issue 21 October 2005 > Will freedom be fair?

Railway services in Europe are facing up to tough challenges, including sometimes overwhelming competition from other transport modes. Reforms are needed if the rail industry is to meet these challenges, but is liberalisation the answer? The European Commission certainly thinks so. It has taken big steps to realise its goals of a single rail area in the European Union, and an increase in rail’s market share within the transport sector. Trade union officials in three EU countries give TI their perspectives on developments…

Increasing rail traffic is key

Competition must be fair, and must help create new markets for rail, say Claudia Menne and Armin Duttine of the German union transnet

German railway reform started more than 10 years ago, as a result of several factors arising out of the German reunification process; it was not just a response to European legislation and liberalisation. The reform is now in its third and final phase, which, besides meeting other obligations, will prepare the way for going public. Meanwhile more than 200 different operators have open access to the network and interest from foreign multinationals like Veolia/Connex and Arriva in entering the German market is increasing steadily.

Transnet is not opposed in principle to greater competition in rail transport, but this must take place under conditions of fair competition on the basis of social and quality standards, and above all it must lead to increased rail traffic.

The railways continue to suffer a considerable disadvantage in competition with other transport modes. The great advantage of the railway having lower environmental, health and security costs must be integrated into market prices. Furthermore for example in Germany railways must pay sales tax and tax on oil in full, while air transport is exempt from tax on oil and from cross-border sales taxation. If these distortions of competition are not changed in the medium term, the initial successes of the railway reform will be destroyed.

In our opinion, corporate policy as well as government policy is one-sidedly aimed at reducing costs, yet in the operational areas and in customer service, personnel cover is no longer adequate.

The consequences are dire: fewer personnel mean less service, poor customer service means fewer customers, fewer customers lead to lower revenues and lower revenues result in less investment and reduced performance. This downward spiral can only be broken by a policy promoting more rail traffic and applying a different, aggressive corporate philosophy targeting new services and markets.

If, as seems likely, Deutsche Bahn AG is floated on the stock market, it will be crucial that we ensure full integration of infrastructure and transport the railway system. We will be looking for concrete agreements, particularly with regard to realistic personnel planning. We will reject any layoffs cited for operation reasons, as well as further outsourcing and the principle of social dumping. And we will want to be sure that workers’ participation is based on a collective agreement.

If the political decision makers and the DBAG’ management agree on these requirements, Transnet TRANSNET will be ready to play a constructive role in the last phase of the reform. The choice is between fair cooperation or a hard confrontation. Our union is ready to deal with both situations.

Open markets, social rules

Liberalisation is happening faster than the development of systems to protect workers’ interests, fears Stefan Heimlich of ver.di

According to a study conducted jointly by IBM and Humboldt University in Berlin, Germany is much further down the road than most other EU countries when it comes to opening the rail transport market.

Ver.di sees the opening-up of the market as an opportunity for the railways as a mode of transport. This is because both passenger and freight transport stop at the borders of the individual EU member states and thus have to be organised on a pan-European level.

Our main competitor is road transport. Within the railway sector we need fair conditions for competition, which are harmonised on a European level in order to ensure equal access to services dependent on the rail network. We must not repeat the mistake made in Britain of privatising the rail network (ie the infrastructure) if and when Deutsche Bahn AG is floated on the stock market.

Before the third Railway Package can be adopted, we feel, the impact of the first two liberalisation packages in the rail freight sector must be assessed.

Ver.di is critical of the fact that the opening-up of the market is happening much faster than the creation of harmonised systems to protect workers’ interests. Working people’s wages and conditions must be safeguarded.

Safety must always take priority over open access to the market. European railways are operating with five different electricity supply systems and 15 different train control systems. In the medium term, we need to bring in highly qualified staff to overcome these technical barriers. In the long term, such differences must disappear. To achieve this, the EU should make available some financial incentives.

The end of public service?

Passengers and staff will both suffer the consequences of a liberalised railway, says Jean Yves Petit of CGT, France

The CGT expects the liberalisation of international railway passenger transport to have a negative impact on passenger transport as a public service. It will be the same for regional and national services, especially in the case of small or medium sized countries. And we expect a continued reduction in employment, and a deterioration in working conditions, in the sector.

The opening of the “market” and introduction of competition will destroy and replace the current system, which is based on cooperation between railway companies.

International passenger trains have been crossing borders for more than a century, since the first railways, and have linked Europe’s capitals and major cities. Up to now these services have always been organised on the basis of cooperation between railway companies, rather than competition. This cooperation has allowed railways to contribute to the planning and development of Europe. It is clear that this would not have been possible within a competitive or fragmented framework.

Passengers think of railways (and public transport as a whole, from buses to taxis) as an integrated service. Their main requirements are simplicity, safety and flexibility when travelling. The European Commission’s proposal does not include a single measure to protect this strategic advantage of railway passenger transport.

In a competitive market, information will be a strategic advantage for each company. Each company will have its own independent system. Services will therefore no longer be complementary or coherent.

Train fares are currently consistent and predictable. Travel arrangements and conditions are flexible (reservations, changes in reservations, dates and times…). Now each company will have its own system for fares and reservations, and passengers will have to deal with a system as complex and rigid as with air travel.

Rail traffic is currently organised in a coherent and complementary way at international, national and regional levels, especially with regard to connections. Services are flexible but trains run at regular intervals. Continuity of the service is assured in the case of incidents. As a result of the current proposals each company will have its own separate transport plan based on financial profitability. This will destabilise passengers’ right of access to transport as a public service.

Rail transport faces enough problems even without having to contend with liberalisation at the European level. The railways need government support, not the current trend for financial disengagement. Infrastructure costs, already very high, are still rising. There is inequality between modes of transport with regard to covering external costs, notably between rail and road transport. Finally material infrastructure and staff are not getting the investment they need.

On 7 March, European railway workers from unions in more than a dozen countries, met in Strasbourg to express their opposition to a liberalised Europe. This opposition is one of the reasons for the French “no” vote against the European constitution on 29 May. We want to see a social Europe that recognises the importance of public services. Railway workers continue to take action. On 13 June, they blockaded the first train service run by a private railway company (Connex) in France. We demand regulations based on social considerations for workers in the railway sector.

Trains must speed up

Government investment is needed to allow the railways to compete with roads and airlines, says Oystein Aslaksen of NLF in norway

International passenger traffic from Norway into Sweden and Denmark can be divided into two categories. In one category are the regional services subsidised by the state or the counties. In the other are long distance services, which are supposed to be run on a commercial basis.

The long distance international services from Oslo to Stockholm and from Oslo to Copenhagen via Gothenburg were until last year run by a company called “Linx” owned on a 50/50 basis by Norwegian State Railways and Swedish State Railways. However this company found it impossible to run the services on a commercial basis without state subsidies. The company was dissolved and the services closed. And now, with a conservative government in Norway, there is no political will to raise the money needed.

Norwegian State Railways has restarted the route between Oslo and Gothenburg (Sweden). This service is a regional service on the Norwegian side and thus it is subsidised. Swedish State Railways has set up a night train service, which they hope will survive.

The basic reason for the financial troubles of these international train services is lack of investment in the infrastructure. With one exception, the maximum line speed on the Norwegian side (which is mostly single track) has reduced from 130 km/h down to 80 km/h. At the same time there have been large improvements in the road system, and an excessive construction of motorways.

This means that the train has a total travel time not compatible with express-buses, which in many cases also are cheaper. The flight services are also very frequent and relatively cheap.

What then are the solutions for the railway in this situation? Certainly not liberalisation. In order to put the trains back on the tracks Norway and Sweden must make substantial investments in the railway infrastructure with the basic goal of increasing the average speed. The travel time must be reduced by at least 40 per cent.

In the mean time, the services must be co-ordinated by the state owned companies on both sides of the border. Furthermore, the services must be subsidised so that it is possible to build up sufficiently frequent timetables and improve other standards to meet the demands of the travellers.

Privatisation and liberalisation do not solve a single problem in this situation and the Norwegian unions strongly oppose them.

As Norway is a member of the European Economic Area and strongly influenced by the directives adopted in Brussels, we also take an active part in the opposition set up by the ETF. The Norwegian unions participated in the demonstration in Strasbourg in March against the liberalisation proposed in the third railway package.

Opening the market wider

The third “railway package” of reforms, agreed by the Transport Committee of the European Parliament in April 2005, builds on the liberalisation gained in the first and second packages, and now concentrates on passenger services more>>

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Issue 21 October 2005

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Opening the market wider

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