Bulgarian State Railways BDZ's 'Layoff Count' Hits 500

More than 2000 of the 13 000 railway workers in Bulgaria are expected to be laid off. Photo by BGNES

A total of 504 Bulgarian railway workers have agreed to be laid off voluntarily, the managed of the vastly troubled state owned railway company BDZ has announced.

Ever since making public its plan to lay off at least 2 000 workers, together with other austerity measures, the hugely indebted state company BDZ has been keeping a weird "layoff count" by announced to the media every single day how many of its employees have agreed to quit in exchange for a one-time payment of six month salaries.

BDZ's "layoff count" surpassed the benchmark figure of 500 on Friday, BDZ said in a press release, adding that by November 18, the management has "invited" a total of 1 800 workers to "agree to be laid off."

The railway unions have reacted harshly to the government plan of downsizing the staff of the railways as well as the number of trains in operation, and have called a general strike of the railway workers on November 24.

Bulgaria's railway unions have vowed to stage a mass strike after the recent announcement of the management of the troubled 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

The syndicates have also 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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