Back in state hands

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Five years after a privatisation progress that wreaked havoc on the work force, Estonian Railways has been renationalised. But can the government be trusted this time? asks Jolan Sevtsov

Another stage in the history of Estonian Railways has come to an end. It is now once again the property of the state. Is this a good thing or a bad thing? It’s a good thing, of course. Strategic facilities should be state-owned. Yet in the press the opinion is repeatedly expressed that it’s not clear what should be done with this acquisition.

In order to avoid making the same old mistakes, it is probably a good idea to look back and understand what went wrong in the past. As we know, there is no single truth that is universally applicable. It is therefore worth looking at the events that have unfolded through the eyes of the workers — of the ordinary citizens, so to speak.

Five years ago, nobody denied that the decision to privatise the railways was political, and nobody denies it today. That decision will have to remain on the consciences of those responsible for taking it. During the privatisation process, the union repeatedly asked the government and the privatisation agency to be included in the discussions of the privatisation agreement.

We wanted to know what the consequences would be for the workers, and to agree a social programme. In Estonia there is a law on trade unions that entitles us to be involved in the taking of decisions that affect workers.

In 2006 alone, around eight per cent of its workers took voluntary redundancy. The company is now faced with the problem of a shortage of qualified personnel.

The position adopted by the government at the time can only be described as “strange”. At first, its reply to all questions raised by the union was that social issues would be resolved in the privatisation agreement. In June 2001 Prime Minister M. Laar assured the workers’ representatives that there would be no redundancies — that there might even be an increase in the number of jobs — and that social issues would also be taken into account. He directed the potential investor towards the government’s representatives, justifying this with the assertion that we did not yet qualify as partners.

And once privatisation had happened, the government declared: you now have an owner, you should be negotiating with the new owner. Now they choose to forget that the union was forced to launch an intense struggle for the workers on its own, with no support from the state.

Struggle for concessions

In order to alleviate as best it could the position of the vast numbers of people who were to be made redundant, the union concluded a social programme and a tripartite agreement with the state, and fought for the rights of those who kept their jobs but were being forced to perform the duties of two or more specialists for the same pay.

Under the agreements that were signed with the government, all railway workers would get the opportunity to be retrained by individual specialists. People learning a new trade would be entitled to a grant for six months, to the value of 50 per cent of their wages. Those who were unable to find a new job within six months would be entitled to a so-called relocation allowance.

A payout from the employer was prescribed that would be twice as big as the legally prescribed redundancy payout. For a worker with the maximum length of service, this payout would amount to 16 months’ average wages. Workers with less than three years to go before retirement would be entitled to take early retirement and to receive a pension from the employer to the value of 50 per cent of their wages until they reached retirement age.

Categories of workers with the preferential right to keep their jobs, the so-called groups of least protected workers (sole breadwinners, the disabled, etc.) were stipulated. An agreement was to be concluded every year specifying the number of jobs in the company.

Taken together, this all cost the government a lot more money. But it goes without saying that nobody wanted to sign these agreements. Over four years, we staged four strikes.

Damage done

These days there’s unemployment insurance, and it’s relatively easy to find work. But back then a lot of people were thrown onto the labour market at the same time who had not worked anywhere other than on the railways, and who were living in the same region. This was a big problem. There were strikes, and letters to the press. But the American owners were under no obligation to think about the regional politics of Estonia. Their business plan was drawn up for a period of five years.

The ill-considered and badly executed redundancies had other consequences, too. Over the past five years the workforce of Estonian Railways has almost halved. When Estonian Railways was privatised it had 4,278 employees; it now has 2,350. In 2006 alone, around eight per cent of its workers took voluntary redundancy. The company is now faced with the problem of a shortage of qualified personnel.

New people simply aren’t joining. And those who have recently been hired will not become valuable specialists any time soon. In the conditions of a market economy, money does not fall from the sky, it has to be earned. But how is this to be done, when the business is losing specialists due to low wages? The experiments on people have borne fruit: for many railway workers, the words “motivation” and “incentive” are nothing more than words with negative connotations.

Edelaraudtee, a company servicing passenger trains, had already been privatised. Lines that served regions far away from the capital were being closed. Back then the press was saying that taxis could be used to take children to school and people to work. Now it is saying that this isn’t the sort of Estonia that we dreamt about, that the regions need to be regenerated, that the state has an obligation to make transport links in the republic convenient and accessible for all. But in the past they’d grit the ice-covered roads in winter so that buses could get to remote villages. That doesn’t happen any more.

Competition

Estonia is currently the only country in the European Union to have completely deregulated both the passenger and the freight-transport markets. We are seeing the dangers that are resulting from the new Railways Law and the liberalisation of the freight-transport market. Other countries are thus far only considering such a move. The main argument advanced in favour of liberalising railways is that a more competitive railway market encourages freight transport to switch from the roads (where it puts a lot of stress on the environment) to the railways.

In Europe, where most freight is moved by road, the railways account for only a small proportion of freight transport. EU countries are striving to make their railways popular again, in order to revitalise the industry and solve problems connected to environmental pollution. But in Estonia the decisions that were taken moved us in the opposite direction.

Today, the once efficient and well-regulated system is breaking down. Not all the operators that have appeared on the market are coping with the technical problems. Since traffic capacity is allocated every year, the operators have no long-term interest in their activities, on the principle “today is here, tomorrow is over there”.

The state is now starting to gather in what it so imprudently scattered to the winds. It has already proposed to Edelaraudtee that its infrastructure be returned to state ownership. Once this happens, the entire rail infrastructure will belong to the state. Experience shows that in private businesses the decisive argument is not the political situation but economic expediency, and negotiations with the employer are proceeding more constructively.

Is everything being done for the benefit of the republic, and not just out of a desire to attract EU money? Let’s hope that decisions will be taken with a long-term perspective in mind, and not just with an eye on the next elections. We hope that as well as using money from EU funds we will now adopt a European industrial-relations culture in Estonia. We want efforts and resources to be expended not on empty words but on building respectful relations between the worker and the employer, in which the specialist worker is the real capital.

Jolan Sevtsov is the president of the Estonian Railways Union.

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Issue 27 April 2007

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