200 Bulgarian Railway Workers Quit ahead of General Strike

Business | November 14, 2011, Monday // 18:49|  views

"Bulgaria, which way are you going without a railway?", asks the banner of a protesting railway worker in Varna in March 2011. Photo by BGNES

A total of 200 workers of the Bulgarian State Railways BDZ have accepted the offer of the troubled company's management to be made redundant in exchange for six monthly salaries, BDZ announced.

The 200 workers in question are about 10% of the 2 000 workers – out of a total of 13 000 employed by the Bulgarian railways – that the BDZ management wants to lay off as part of its desperate measures to save the "technically bankrupt" (in the words of Transport Minister Ivaylo Moskovski) transport company.

The management of the state-owned BDZ Holding announced in early November that it intended to lay off 2 000 workers, and reduce the number of trains in operation by 150 by January 2011, which led the syndicates to declare a mass strike as of November 24, 2011.

Of the 200 workers who agreed to quit voluntarily, 90 are employees of BDZ Passenger Services, and 110 are employees of the slated for privatization BDZ Freight Services.

Meanwhile, the syndicates have been demanding a new collective labor contract from the BDZ company, and have risen up against the intended privatization of the only profitable unit of BDZ, BDZ Freight Services.

They had threatened to launch a general strike in October 2011 but decided to call it off over continuing negotiations with the government. Earlier this year, in March, the launch of their general strike got the government to yield to their pressure. However, their victory appears to have been brief and inconclusive, especially against the backdrop of the increasingly worsening situation at the Bulgarian railways.

The austerity measures are supposed to help stave off the bankruptcy of the hugely troubled state railway company BDZ, declared recently the head of the BDZ Board Vladimir Vladimirov.

"We've got two options. We are either laying off 2 000 employees, or we are going towards bankruptcy, and then all 13 000 employees will lose their jobs," he stated.

In addition to laying off 2 000 anyway impoverished workers, and to shutting down 150 trains, BDZ Holding is also planning to make money by selling some of its assets, and by upping train ticket prices.

Thus, ticket prices along state-subsidized routes will be increased by 9% as of January 1, 2012, and those of "business trains", i.e. the handful of profitable railway routes in Bulgaria – by 15% as December 1, 2011.

The combined austerity and layoff measures are supposed to save BDZ some BGN 22 M annually, and about BGN 105 M over the next five years; the funds in question are to be used to cover some of the debts of the ailing state company, according to Yordan Nedev, BDZ CEO.

In 2011 so far, the BDZ management has made BGN 4 M from selling assets and other measures, and some BGN 8 M more are expected from austerity and privatization measures by the end of the year. The management plans to make another BGN 25-30 M in the first six months of 2012.

The BDZ management is firmly intent on privatizing the only profitable department of the company, BDZ Freight Services; they argued Friday that in the past 5 years the freight transport by the railways declined by 50%.

The crisis at the Bulgarian State Railway company BDZ has been worsening as in October 2011 Transport Minister Ivaylo Moskovski declared it to be "technically insolvent."

At the beginning of October, Finance Minister Simeon Djankov revealed the massive debts of the BDZ company total BGN 771 M. Of those, BGN 531 M are debts to financial institutions. This revelation came in the wake of an announcement in September 2011 that for the time being the World Bank has refused to grant the Bulgarian railways an urgently needed loan of BGN 460 M, which was negotiated in December 2010.

Another major issue of dispute on the agenda is the proposed privatization of BDZ Freight Services, which is traditionally more profitable than the passenger services of the state company.

Raising several hundred million BGN is necessary if BDZ wants to receive a massive, BGN 460 M loan from the World Bank for restructuring and repayment of old debts.

Since December 2010, when a preliminary loan agreement in the form of a memorandum with the World Bank was signed, the Bulgarian government had been hoping to get a loan of BGN 460 M for BDZ, together with a loan of BGN 160 M for the National Company "Railway Infrastructure", from the World Bank for badly needed reforms.

Unlike BDZ, however, Bulgaria's National Company "Railway Infrastructure" is expected to get its BGN 140 M loan from the World Bank because it is not going to cover old debts with the money but will invest them in new railway network equipment.

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Tags: BDZ, Vladimir Vladimirov, Yordan Nedev, BDZ Freight Services, CEO, Petar Bunev, Strike, Bulgarian State Railways, railway workers, Strike, protest, Retirement, Simeon Djankov, finance minister, layoffs, layoff


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