France-SNCF: Reform Steam-Engin Targets the Railway

imagesBy S.G Kazolias. President Emmanuel Macron’s reform strategy remains the same: call in the unions, associations and organizations of those concerned by labor reforms for “consultations.” The government says what it wants, the others tell the government what they won’t accept and the government goes ahead with its original plan through a process that by-passes parliamentary debate.

This is what Macron did to reform work laws last autumn making it easier to hire on temporary contracts, easier to lay-off employees, and put a ceiling on compensation. And this is what he will do to reform the “special regimes,” or advantages, of the costly national railway company, the SNCF.

The government has decided they will railroad the reform through using Article 49-3 of the constitution which basically says parliament has to vote “yes” or “no” on the bill without debate and without amendments. As Macron has a crushing majority, there is little doubt as to the outcome of a vote. However, the rail-road unions have promised a strike as hard as that of 1995 which crippled the country.

Only an opening shot

The government is beginning with the SNCF before attacking other “special regimes” such as the RATP regional commuter trains, busses and metros, the EDF electric company which, although privatized, kept its “privileges” from its nationalized status and there are more in Macron’s cross-hairs, including civil servants. In all, there are 37 “special regimes” in France. These special advantages cost the French tax payer an arm and a leg: 38 billion euros in 2016.images

With the French debt at nearly 100% of GDP, and under pressure from Brussels, Macron promised to reduce government spending by 40 billion euros. He has already modified the retirement rules for postal workers and those at Orange, the privatized French Telecom company. The expected ‘hot autumn’ of labor protests failed to materialize. This time it may be different.

A list of things to reform at the SNCF

Train employees who ‘work on-board’ retire at 53 while others in the SNCF retire at 57. All other French workers can retire from age 62. In 2012, the average age for retirement at the national train company was 55. The SNCF has 150 thousand employees to cover 270 thousand pensions.  The government has to inject over three-and-a-half billion euros a year to cover SNCF retirement costs. The tax-payer covers more than half the pension of a retired SNCF worker.

SNCF employees retire with 75% of their salary over the last six months rather than based on the average of the best 25 years in the general pension scheme. Other advantages include lifelong employment guarantees, fixed regular raises, access to free medical centers, free tickets for life with reduced tickets for family members (1) and up to eight weeks paid vacation according to the function. The SNCF also owns housing which they let to their employees at extremely low rents. In 2014, government subsidies covered a full 45% of the SNCF resources.

Macron has promised not to change the contracts of those already working but future hires will be under the ‘private law’ contracts other French employees have. The government also wants to reduce “deadwood”. Forty percent of the employees are in management which a recent report to the Prime Minister severely criticized.

Before the government can “open the rail service to competition,” or, in other words, partially privatize it, they have to reduce the SNCF’s huge 47 billion euro debt. The SNCF has been losing money for decades. Prime Minister Edouard Philippe says it costs 30% more for trains to run in France than elsewhere in Europe.

UnknownOpponents of the reform and privatization say the government will only sell off the most profitable lines while keeping the more expensive ones on the tax payer’s euro. They also say people who live in rural areas will see their local stations close and their rail services disappear.  They call for greater taxes on the wealthy and on finance to cover expenses and accuse the government of attacking the weak and poor to further enrich the affluent.

The trade unions at the SNCF have promised to strike, for a month if necessary, to stop the reform. It only takes 10% of them to walk off the job to bring the country to a standstill. Reforms of the SNCF have been attempted in the past and broke their teeth over the strikes. But President Macron has demonstrated he will face the street to reform the economy.  And he has 62% of the French behind him to change the SNCF, according to one recent poll.

Notes

  1. SNCF employees, their spouse and children (up to the age of 16) get 16 free tickets a year. They are then charged on 10% of the price for any other tickets beyond that limit. The parents and parents-in-law of employees and pensioners also benefit. They get four free tickets a year. The SNCF delivers a million such tickets per year at an estimated annual cost of 100 million euros, according to the French government auditing department, la Cours des Competes.
  2. This explains (in France) rather well the figures and what will change. https://www.franceinter.fr/societe/sncf-menace-par-la-reforme-que-prevoit-vraiment-le-statut-de-cheminot

One Comment

  1. For years the EU has known France must realign its pensions and compensation payoffs to match reality. Yes it is hard and will be fought, be it is the only way France can stop being a liability that would bring down the collective. The EU is, realistically, a socialist state running on the fuel of Germany alone. But that cannot last if France does not correct its obvious social and economic drain on the Union.

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