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CD to cut out 6,000 workers

Layoffs are railway's worst in years; unions consider strikes

By Frantisek Bouc
Staff Writer, The Prague Post
(January 29, 2004)


National railway operator Ceske drahy (CD) plans to further trim its work force in what is expected to be the company's deepest staff cut in years.

CD announced in late January that it will dismiss up to 6,000 people, most of them by April. Unions have threatened to strike if dismissed workers do not get what the organizations deem as adequate compensation.

CD spokesman Petr Stahlavsky said, "Reducing the work force is crucial in order to keep the railways running." He added that layoffs are a regular occurrence at CD -- he said it has been shedding staff by around 3,000 people annually since the early 1990s.

Stahlavsky said that the need for deeper cuts in the work force resulted from the appalling economic situation of the state-run railways. According to him, CD is expected to end deep in the red in 2003, with a net loss reaching 500 million to 1 billion Kc ($19.2 million to $38.5 million).

Stahlavsky said that wage costs consume 50 percent of the company's operating expenditures every year. As of January, CD employed 77,500 people, and their average monthly salary totaled 17,500 Kc.

Following a 2003 agreement with its unions, CD management agreed to increase salaries by 5 percent. Stahlavsky said that releasing up to 6,000 workers should secure funding for those raises.

"We couldn't increase the overall volume of money used on wages, so we had to drop staff," Stahlavsky explained.

In addition, the implementation of technology enabling remote management of railroads and stations enables CD to keep slimming its work force. Stahlavsky said that further dismissals are likely.

According to a government social-support program, dismissed CD employees who retire in less than five years should be entitled to compensation payment of up to 100,000 Kc. The final amount depends on their original wage and length of employment.

Stahlavsky said that the government committed itself to pay over 100 million Kc to the social program. However, the high number of staff that CD plans to dismiss would require up to 500 million Kc, he said.

"It was the government who introduced this program and financed it," Stahlavsky said. "We therefore need to negotiate with the Transport Ministry on raising the sum."

However, Transport Ministry spokeswoman Ludmila Roubcova said that the ministry's financial sources were limited.

"Neither the government nor the Transport Ministry committed themselves to fully cover expenses resulting from the social program [for dismissed CD employees]," Roubcova said. "The actual scale of dismissals and the need of funding the accompanying social programs must be incorporated in CD's business plan. ... CD should participate in this."

Railway union leader Jaromir Dusek said that the company's numerous trade unions will initiate a strike if CD keeps releasing staff without securing adequate social programs for the dismissed workers.

Stahlavsky said that CD was determined to further negotiate with both the government and the trade unions in late January.

Frantisek Bouc can be reached at fbouc@praguepost.com




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