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Rail freight operator prepares to make further mass layoffs

NEARLY two years after a revitalisation process was launched by the previous government to return the loss-making state-run railway companies to financial stability, state-run railway freight carrier Cargo is preparing another wave of layoffs. Last year the company’s payroll was cut by nearly 1,700; this time the company is planning to sack another 600 people by the end of 2013.

NEARLY two years after a revitalisation process was launched by the previous government to return the loss-making state-run railway companies to financial stability, state-run railway freight carrier Cargo is preparing another wave of layoffs. Last year the company’s payroll was cut by nearly 1,700; this time the company is planning to sack another 600 people by the end of 2013.

But what the carrier calls an “optimisation” process was described by the former transport minister who launched the original reforms as an “irresponsible measure”, the SITA newswire reported on December 4.

“The aim of the optimisation is to increase the effectiveness of operating processes and work, to set the optimal employment to planned performance in 2013 and to achieve the stabilisation of the company,” said Cargo spokesperson Monika Schmidtová, as quoted by SITA, adding that the total costs of “optimisation” might reach €4.5 million.

The management of Cargo also said it would establish an accompanying social programme for the dismissed employees. Moreover, it said it would provide them with advice and, if it creates new jobs in the future, it promised to offer them first to laid-off workers and, if necessary, provide them with re-qualification training, SITA reported.

Former transport minister and current chair of the Christian Democratic Movement (KDH) Ján Figeľ criticised the layoffs. He said during a press conference held on December 4 that current Transport Minister Ján Počiatek was abolishing people’s security and that Prime Minister Robert Fico was doing nothing to stop it.

“I regard it as irresponsibility since Cargo was basically revitalised after we got it [in 2010 in a state] close to bankruptcy,” said Figeľ, as quoted by SITA.

Moreover, the former transport minister pointed to the fact that at the same time Cargo is planning layoffs, it recently hired Matej Hambálek, the son of an MP for the ruling Smer party, and Ambróz Tokár, an alleged acquaintance of high-profile fugitive and murder suspect Karol Mello, the Sme daily wrote.

Ministry spokesperson Martin Kóňa retorted that it was surprising that the optimisation was being criticised by Figeľ since, while transport minister for nearly two years, he had sacked a total of 4,000 people from the railway companies, including nearly 2,000 employees of Cargo. He also rejected Figeľ’s claims about the revitalised company, saying that the planned loss for this year stands at €24 million, the TASR newswire wrote.

Shortly after being appointed to his current post, Počiatek denied that there would be mass layoffs at the railway firms. However, he added that “we will certainly continue with the revitalisation plan and this will lead to some requirements for optimising the condition [of the firms]”, as quoted by Sme.

Mass layoffs also took place in 2011

The previous government of Iveta Radičová adopted an extensive plan to stabilise the finances of all three state-run railway companies in March 2011. In addition to the dismissal of thousands of employees, the plan envisaged a reduction of passenger routes and the identification of a strategic partner for Cargo. Figeľ, speaking as transport minister when the plan was adopted, said that the existing situation was unsustainable, with the overall indebtedness of the three companies climbing towards €1 billion.

“It isn’t about layoffs but about rescue,” Figeľ stressed at the time, as quoted by TASR.

Between October 1, 2010 and December 31, 2011 Cargo dismissed 1,669 employees, according to SITA.

As well as the layoffs Cargo implemented financial measures that affected all its activities. The company ended the first half of 2011 with an operating profit of €29.1 million, €3 million more than envisioned in the original plan. Compared with the first half of 2010 this marked an improvement of €28.8 million. In spite of this, the company still reported an overall loss during the same period of €6.2 million, although this was also an improvement on the €36.3 million it had lost in the first half of 2010.


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