PKP Cargo Fires and Spends

PKP Cargo is a freight cargo company. PKP was the name of the state railways in Poland and it was divided into separate companies. PKP Cargo was created in 2000. The PKP Cargo company owns a minute share of the stocks (less than 3%) while the state treasury owns the rest. PKP Cargo in turn owns a majority or total share in 20 other companies, most of which are also freight companies. In is a very intricate and confusing financial web.

All of the companies around the rail industry are under constant pressure to make cuts; this was in fact part of IMF-recommended policies for Poland and other Eastern European states. With the crisis, PKP Cargo in particular wanted to cut a lot of jobs. Job loss in PKP Cargo may wind up being the biggest hit to any group of workers in Poland: different figures have been mentioned with many saying that up to 7,300 jobs will be lost. (One source, Gazeta Prawna (or the Legal Newspaper) even puts this estimate at 9,500 jobs.)

Last week, 15 unions which operate in PKP Cargo reached an agreement with the company. They agreed that some people would no longer "provide services" to PKP Cargo and that contract workers would receive a 5% pay decrease. They agreed that 1000 people would lose their jobs in March and that another 4000 "did not need to work".

What does this mean, that they "do not need to work"? Under Polish law, this could mean different things. For example, if a worker is entitled to early retirement, he may be forced into it during restructuring.

It's very interesting that while the government is fighting with workers from many industries about early retirement, and while the government wants to strip most workers of these priveleges, in 2007 they introduced special legislation for railway workers for early retirement. It is clear that they supported this because they wanted to get rid of people and downsize operations. There is no law that a company must replace workers who retire, which means that they tend to try to force people to retire when making big cuts. Basically, in the case of "financial difficulties' or large group reductions, these people are the first to go and it is even stated that they should be fired first.

The mass dismissals in PKP Cargo are tragic for the workers in two cities especially: in Lapy and in Przemysl.

Lapy is a city of 17,000 people which has been devasted by the closing of several large workplaces in the last few years. Lapy was home to a sugar refinery which closed in 2008 despite mass protests. The closure was due to the EU restructuring of the sugar industry which included cutting the guaranteed price of sugar by 39% in the EU and allowing more importants. The strategy targetted the sugar industry in Poland in particular. It allowed it very small production quotas , forced it to import sugar and to close down refineries. Over 20 plants have shut down since Poland's accession to the EU. The closure of the plant in Lapy meant the loss of not only the 250 people who worked there, but loss of income for 2000 small planters/ farmers who provided them with beetroot. Now 400 people who work in PKP Cargo in Lapy will be losing their jobs.

Like with the situation in the sugar plant, the workers are not taking it easily. Next week they will be in Warsaw will a big protest.

In Przemysl, workers from PKP Cargo, together with workers from the Forte furniture factory, have also been protesting, blocking the streets last week. From 500-800 people are to lose their jobs in PKP Cargo Przemysl. Przemysl is a larger city than Lapy (68,000 people), but it is known for high unemployment. The region has been disporportionately hit by the crisis.

With all these cuts going on in PKP Cargo, you would think that the company was somehow being devasted by the financial crisis.

Today the news came out however that the management of PKP Cargo had given themselves handsome bonuses. But it gets even better.

The big news in the railway industry now is that PKP Cargo ... wants to expand. Not in Poland, not in the East or in other low cost countries. No. PKP Cargo wants to buy a German company and is in the midst of negotiations. The at bossman's press conference, the Director of PKP Cargo bragged about the company's "good financial situation and cash reserves" and claimed it had a 250 million IN CASH ready to spend on this investment.

The week before however, it was playing the pauper, trying to convince the unions that it might collapse if they didn't help them save 50-60 million this year. In addition, they even claimed in the press that they might "go under" if they state didn't rush in and offer it some more subsidies.