Tensions over railway restructuring

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From January 2005, Belgian Railways (SNCB/NMBS) will split into two subsidiaries, one responsible for transport operations and the other for managing the infrastructure. In the run-up, trade unions are concerned about the job losses and a deterioration of working conditions, while the nomination of the directors of the new companies in late October 2004 proved controversial.

From 1 January 2005, Belgian Railways (Société Nationale des Chemins de fer Belges/Nationale Maatschappij der Belgische Spoorwegen, SNCB/NMBS) will cease to exist in its current form. A new structure made up of a holding company with two subsidiaries will allow it to conform to EU requirements for the transport sector. A 'new SNCB/NMBS' will be responsible for transport operations while Infrabel will be responsible for managing the infrastructure.

Current state of restructuring

The restructuring of the publicly-owned SNCB/NMBS is taking place within the framework of a modernisation plan entitled 'Move 2007' (BE0403302F and BE0311301N). On 1 April 2004, the 'common front' of railworkers' trade unions signed a memorandum of understanding with SNCB/NMBS management concerning the measures to accompany this plan. This memorandum is based on several conditions, notably that: the EU authorities accept the structural reform; guarantees are in place on the maintenance of the railworkers' current special status and social dialogue; and 80% of the enterprise’s historic debt (approximately EUR 7.4 billion) be assumed by the state in 2005. On this last point, there was some uncertainty until 12 October 2004, when Prime Minister Guy Verhofstadt’s made a general policy statement, in which he confirmed that the debt would be assumed in the budgetary year 2005.

Legally, the Belgian state will hold 100% of SNCB/NMBS Holding, which in turn will own 100% of the shares of 'new SNCB/NMBS' and 50% plus one share of Infrabel but only 20% of the voting rights. The rest of Infrabel (50% less one share and 80% of the voting rights) will belong directly to the state (under the terms of the Royal Decree concerning the management structure of the railway infrastructure, published in the Moniteur Belge, 24 June 2004). All the same, the Council of State (Conseil d’Etat/Raad van State) has expressed some reservations concerning the guarantees of Infrabel’s independence.

An expert in this area, Axel Gautier, a researcher at the Saint-Louis de Bruxelles University Faculties and at the Centre for Operations Research and Econometrics (CORE) at the Catholic University of Leuven (Louvain-la-Neuve), draws several lessons from an international comparison of the liberalisation of rail transport. According to him, several aspects of the new SNCB/NMBS structure are, or will be, problematic: which structure will be responsible for regulating access to the infrastructure? How to adapt financing a public service in a liberalised market? What are the eventual risks or opportunities of a potential regionalisation of the company and transport policy in Belgium?

Social tensions

During summer and autumn 2004, several events have occurred that have sown unrest and anger in the ranks of SNCB/NMBS trade unions - but also among local elected politicians worried about their municipality becoming isolated if local railway ticket offices are closed - and have provoked a series of spontaneous work stoppages. The announcement of the closure of 41 local railway ticket offices during summer 2004, and the announcement of the axing and reallocation of 1,600 employees several weeks later without the unions giving their opinion (a decision that was subsequently suspended) added to the persistent uncertainty about total employment numbers at the company by the end of 2005. The distribution of the 38,000 jobs guaranteed at this date still has to be finalised, but a broad outline is already known: 3,000 to 4,000 jobs at SNCB/NMBS Holding; 14,000 to 15,000 employees at Infrabel; and the rest (between 20,000 and 21,000 jobs) to manage transport operations. The agreement on the distribution of the holding’s personnel between the different entities will need to be approved by a two-thirds majority in the railways national joint committee. The unions, however, have indicated their uneasiness in the face of a new reduction of the number of workers employed by the SNCB/NMBS, currently 37,147.

There is a risk of the unions entering the forthcoming negotiations in an unhappy frame of mind, having the impression that management is not taking account of their positions. According to the union common front (on 7 October 2004): 'To put it clearly, management is working with a hidden agenda, that of the future business plan 2006-7.' In the face of these concerns, Karel Vinck, the SNCB/NMBS executive director, has tried to calm things down by admitting that, if mistakes have been made, these should be attributed to 'management overzealousness' in being too hasty in implementing the restructuring plan.

Appointments and resignation

In parallel with these social tensions, Mr Vinck became involved in a confrontation with the transport minister, Johan Vande Lanotte. The debate concerned the appointment of the future managers of the new SNCB/NMBS organisation. Foreseen for the beginning of October, this was delayed, and Mr Vinck stated: 'I demand that the nominations for the managers that will be brought into the SNCB/NMBS will be based practically exclusively on professional skills. Nominations based on political criteria will be harmful to the company.' The message arguably seems to have been received by the government because it has named the people sounded out by Mr Vinck. Dominique Offergeld of the French-speaking liberal party, who joined the SNCB/NMBS management board in 2002, will be president of SNCB/NMBS Holding’s governing board; Marc Descheemaecker, a Flemish liberal who has been managing the SNCB/NMBS cargo division since 2002, will be responsible for the new entity responsible for operations; finally, Luc Lallemand, a French-speaking socialist and the SNCB/NMBS financial director since 2002, received unanimous support to head Infrabel.

These nominations had barely been made public when they were followed by Mr Vinck’s announcement that he wished to make an early departure from his position at the head of SNCB/NMBS on 30 January 2005, despite the renewal of his mandate. According to some commentators, this decision is a logical step given the stormy relationship between Mr Vinck and the minister and because of alleged incompatibility between a logic of accountability that privileges competence and a political logic that privileges a candidate’s political orientation. Mr Vinck will remain executive director of SNCB/NMBS Holding and of the company in charge of operations until the date of his departure. Filling his position promises a new round in the struggle at the top of the railway company.

Commentary

The changes taking place in SNCB/NMBS raises issues about the trade unions' position and the nomination of the managers of the new organisation. First, the unions are concerned about the number of job losses (1,440) in the framework of the 'Move 2007' plan, which is higher than foreseen, and fearful about management manipulation in transforming the enterprise according to a hidden agenda. The workers’ representatives also have a different interpretation of the announced ticket office closures. If this is following a logic of cost-effectiveness, it could lead to increased insecurity at small stations and also among ticket inspectors, who would have to carry larger amounts of money and perform extra work. This policy does not take account of the social cost to railworkers and to the inhabitants of the areas served by these stations.

We are faced with two different interpretations: management is following a logic of making the enterprise cost-effective and a reduction in the number of personnel, while the unions are trying to defend a link between a high-quality public service based notably on safe working conditions. In other words, the tensions facing the unions may highlight the difficulties of the unions’ defence in the face of demands for increased productivity and increased flexibility of working conditions. Where is the limit between maintaining a public service and the demands for the cost-effectiveness of the equipment and infrastructure? The issue at stake, for management, is to rebuild confidence with the workers’ representatives in order to negotiate sensitive subjects such as working flexibility, the training of personnel so that they can perform other tasks, and geographic mobility.

The second point relates to the choice of the new directors, which arguably reveals a victory of the logic of skills over a logic of political nominations. This view should be qualified because the political logic is still partially applicable: being the major shareholder in the railway company, it seems logical that the state should find its political orientations present within the SNCB/NMBS board of governors. From an external point of view, this tension could illustrate the complex relationships at the heart of public enterprises, trapped between political interventionism, demands for a high-quality service and the need to reduce costs in a logic of competition. (Thibauld Moulaert, IST, Catholic University of Leuven, Louvain-la-Neuve)