Strikes Loom as Bulgaria Is to Lay Off 7 000 Railway Workers to Get World Bank Loan

Tough talks are ahead for the government representatives (right) and the syndicates (left) on the restructuring plan for the railways and the fate of thousands of workers. Photo by BGNES

The Bulgarian government and syndicates met Thursday to discuss the program for the restructuring of the country's ailing railways, which is crucial in order to get an already promised World Bank loan of BGN 600 M.

While Transport Minister Alexander Tsvetkov and Labor Minister Totyu Mladenov met with the heads of the two major railway unions in Bulgaria, the Finance Ministry, a key stakeholder in the fate of the state railway companies BDZ and NKZI, was the major no show – a fact that infuriated and frustrated the syndicates.

Nonetheless, the government and the unions made an agreement that no people will be laid off at BDZ, the company that handles passenger and freight transport, and NKZI, which handles the railway infrastructure, until February 14, 2011.

In the meantime, the ministries of finance, transport, and labor, the syndicates and the management of the two state companies are supposed to form an inter-institutional group to hammer out a compromise on the restructuring of the Bulgarian railways.

The restructuring program is the major condition for Bulgaria to receive a badly-needed BGN 600 M loan from the World Bank, negotiated in December when a preliminary memorandum of understanding between the government and the international financial institution was signed in Sofia.

As the World Bank demands harsh austerity measures and layoffs at BDZ and NKZI to release the money, the unions immediately voiced their opposition vowing "strikes to the end" on part of the workers. In the meantime, the government has been rushing to come up with plans on where to redirect the massive number of people to be laid off from the railways, one of the ideas being the creation of a security company where they will be able to work as security guards.

Current estimates of the government show that in order to get the WB loan, it will have to make redundant some 7 000 workers - 2 800 workers from BDZ and 3 970 workers from NKZI (National Company Railway Infrastructure).

"These are figures that we cannot accept," railway union leader Petar Bunev from the Confederation of Independent Bulgarian Syndicates (KNSB) declared. He and KNSB chair Plamen Dimitrov said the layoffs could reduce the number of trains running in Bulgaria by 50%.

 The syndicates did not rule the possibility of starting out strikes even before the deadline set at February 14.

"We cannot agree that workers of the two companies must pay the price for the mistakes and mismanagement of the company boards and directors to date and for the lack of sufficient government funding for the railways in the past two decades," Dimitrov and Bunev stated.

Bunev expressed pessimism that any agreement on the restructuring plan will be reached by February 14 since he believes that the Finance Ministry will probably continue not to show up at the respective meetings.

Labor Minister Totyu Mladenov promised that if a larger number of railway workers are laid off, the government will provide opportunities for qualification and training for various jobs.

"We declare that the stipulation in the memorandum for "a 30% reduction of the spending for personnel" is unacceptable," stated back in December the position of the two major Bulgarian railway syndicates with respect to the agreement between the Cabinet and the World Bank.

Bulgarian railway syndicates have opposed vigorously the terms of a loan memorandum that the government signed with the World Bank, and declared their determination for all-out strikes.

The framework memorandum inked Wednesday in Sofia outlines the conditions for understanding between the Bulgarian government and the World Bank under which Bulgaria will get about BGN 600 M in loans for its troubled state railway companies in exchange for harsh reforms.

According to the unionists' statement, the reforms to which Bulgaria is committing to get the World Bank money for the state railway operator BDZ and the National Company "Railway Infrastructure" (NKZI) will cause massive layoffs with thousands of workers losing their jobs.

Furthermore, the syndicates say this "will reduce the staff of the railways to the bare technological minimum, which will create a direct threat to the safety of railway operations, and the life and health of the Bulgarian citizens and the country's national security."

"The railway workers will strike to the very end if the text of the memorandum for the World Bank loans is not amended," warned the head of the KNSB railway syndicate Petar Bunev back in December.

Bunev believes that the some BGN 600 M that the Bulgarian government will get in loans from the World Bank for the railways will go primarily to cover old debts of the state companies, and very little of that money will trickle down for actual investments.

The Bulgarian governments in the past 20 years have been unwilling to try to privatize the railways because of the strategic importance of the railway sector, and the concerns that a private owner would shut down unprofitable routes, and will lay off thousands of people.

Even though the company has seen very little investment over the past 20 years, and its speeds are slow, and many trains are in a bad condition, and it has also been reported to be used for draining state money by senior officials on a number of cases, it has been maintained by the government with subsidies and transfers from the state budget as a kind of a welfare state service to keep this means of public transport accessible and affordable.

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