ON a sunny afternoon it can be a lot of fun skiving off for a couple of hours to play the poker machines in a gaming arcade followed by a beer with your mate. Unless, that is, you are a board member of Germany’s national rail company planning to rationalise tens of thousands of jobs and you get caught.

The Deutsche Bahn rail network has undertaken a huge makeover to convince sceptical investors that it is not a bureaucratic jobs-for-the-boys leviathan made worse by political meddling. The Bahn, as it is known, is being re-cast and polished up ahead of a stock-market listing later this year. It is turning in an operating profit and expanding into a global logistics player. Then there are its shiny new futuristic trains in white and red — one whizzes between Stuttgart and Paris in three-and-a-half hours at more than 300km per hour.

A modern, high-tech conglomerate with a business culture to match — just what the banks, which are being paid in excess of €3 billion (£2.4 billion) to draw up the prospectus, ordered.

Then along comes Norbert Hansen, Deutsche Bahn’s new director of employment, with his €50,000 Audi Q7 4x4, seen playing the fruit machines in a Berlin gambling den while his fellow board members are hard at work on the stock-market float.

As a result the competence, let alone collective commitment, of the board has been called into question. Should the likes of Hansen be allowed to play with the train set if he’d rather be feeding a one-armed bandit? It’s a question his chairman Hartmut Mehdorn has avoided answering despite public pressure.

Admittedly Hansen is technically between jobs. He is a former railway-union boss tempted by Mehdorn to change sides and swap his union leader’s hat for a swivel-chair in an executive suite in Deutsche Bahn’s multi-storey headquarters and a salary package of €1.4m — 15 times what he was getting running the Transnet rail trade union. So the very least investors might have expected of Hansen at this critical time was full-blown commitment to the company — not embarrassing disclosures in the German media.

The stock-market offering of a 24.9% stake in Deutsche Bahn is both controversial and unpopular. A recent opinion poll showed that 70% of Germans oppose the privatisation, seeing market liberalisation as a threat to the German social-market system. There is also uncertainty about who would actually want a minority holding in the German railway system and fears among workers that big job cuts, up to 80,000, are in the pipeline in a drive for efficiencies and profits.

Hansen has been nicknamed Mehdorn’s “poodle” ever since as head of Transnet he had a “road to Damascus” moment a few years ago, dropping his stand against privatisation and converting to the cause of pan-European rail-transport liberalisation as decreed by the EU commission. He has supported Mehdorn to the hilt and, as a parting shot before leaving Transnet, was accused of undermining a train drivers’ pay strike.

Hansen stoked resentment further by letting slip in an interview with Germany’s biggest-selling newspaper, Bild Zeitung, that job changes were on the cards. He suggested this could mean train drivers swabbing out carriages at the end of a shift. The drivers’ union was outraged at the notion of members doubling up as Mrs Mopps. Mehdorn instantly denied such a multi-tasking job was being contemplated.

Hans-Gerd Ofinger, a Transnet official, said: “Hansen has misused our union as a springboard for his own career and with his proposal seriously damaged the trade-union movement. A seat on the board was Hansen’s motive for promoting the privatisation of the Bahn.”

After almost 15 years of wrangling, the German government has finally decided how it will present Deutsche Bahn to the market and has studiously avoided copying the British government’s privatisation of the track infrastructure.

“The British example was not the best to follow. In spirit possibly, but in practical terms, no. We are not going to divorce the network from the rest of the train operation,” said Bernd Weiler at Deutsche Bahn. “If the infrastructure doesn’t belong to you then you don’t mind if you run your trains too fast for the track or skimp on maintenance.”

Instead, Deutsche Bahn AG will remain state-owned, acting as a holding company with two divisions — one responsible for the infrastructure and the other named DB Mobility Logistics AG. The second will run passenger services, freight, catering, ticket sales and the Bahn’s British operation. And it is this new company that is being brought to the market.

“The federal government does not have the capital we need for strategic expansion. Germany is an export nation and if we don’t serve this market then someone else will take it from us. In today’s Europe you need to be of a critical size to do what it is you want,” said Weiler. “As the Americans say, we offer ‘one-stop shopping’ whether it is moving freight from door to door or offering passengers rental cars and bikes at mainline stations. We look after 7m customers a day, 5m of those are passengers. Cash flow is not our problem.”

Under Mehdorn, the Bahn started to turn in good profits three years ago. Last year it posted a record net profit of €1.7 billion on turnover of €313 billion. This has been achieved, however, at the price of upsetting the public, which grumbles about late-running trains and disappearing services.

In 1994, when Deutsche Bahn was created to absorb the old east German communist rail system, it had a workforce of 500,000. It now employs fewer than half that number. In addition, a quarter of the rail network has been closed, mostly in rural areas.

The result is that a once- chronic loss maker costing the taxpayer €10 billion a year is now a worldwide logistics company. Mehdorn has bought his way into eastern Europe, Britain and America. This year a direct cargo link with China will be established. He has achieved practically everything he set out to do a few years ago; and experts expect that the capital raised by the flotation will be used to spread the cargo-logistics net even wider.

The question is: how much is it worth? The entire rail system is valued by some experts at between €200 billion and €300 billion. The German transport ministry, though, has officially listed the Bahn’s valuation at €55.4 billion.

Critics say the government is vastly undervaluing a public asset to make the 24.9% on offer attractive and thereby a success. What is more, only a third of the capital raised will be used for investment. The rest ends up in the government’s coffers.

After all the political infighting over when and how to privatise Deutsche Bahn, some in Frankfurt banking circles predict the sell-off will again be put back because of the state of global markets. For while Germany may possess some of the fastest trains in Europe, it is lumbered with one of the most cumbersome political systems.

How long it will take the Germans to meet their original goal and privatise the other 25% is anyone’s guess.

See also:

German rail union in crisis

WSWS: 6 June 2008
By Sybille Fuchs

On May 30, the German parliament (Bundestag) voted in favour of the partial privatisation of the country’s railway system. According to the government plan, 24.9 percent of German Railways (Deutsche Bahn—DB), which until now was in government hands, will be floated on the stock market beginning November 5.

The first parts of DB to be privatised will be passenger and long-distance transport, regional and suburban rail (including bus lines and rapid-transit rail), and other rail services. All of these sections of the rail system have been amalgamated under the DB subsidiary, Mobility Logistics (DB-ML), which employs three quarters of all existing rail personnel.

The chairman of DB, Hartmut Mehdorn, welcomed the Bundestag decision and declared his confidence in the future of the enterprise, which he said he intends to turn into a global player.

Experts assume that the initial privatisation is just a first step. A draft agreement is currently circulating that allows DB-ML to release its own subsidiary companies for partial privatisation and sell off other services completely. The draft contains formulations that allow investors to purchase up to 49 percent of the subsidiaries responsible for long-distance, regional or city transport. In addition, the draft provides substantial leeway for the closure of non-profitable stretches of rail track.

In an interview with the Bild newspaper prior to the vote in the Bundestag, Mehdorn’s new labour director, Norbert Hansen, declared that he saw no problem with the privatisation of up to 49.9 percent of the railways. Until a few weeks ago, Hansen was chairman of the rail workers’ union Transnet, before switching over to the DB executive committee. In his interview with Bild, Hansen made unmistakably clear that his priorities rested 100 percent with the profit interests of his employers.

Hansen announced, “We will have to further rationalise the railways, and that will not be possible without reducing personnel in some sections.” He already has experience in overseeing job reductions as head of Transnet, and his aim is to ensure reductions without resorting to compulsory redundancies. First and foremost, rail employees must demonstrate more flexibility and efficiency in their jobs.

Hansen used the example of a private regional rail company to show how such flexibility was possible. In such companies (which all pay lower wages), drivers not only drive the trains; they “also occasionally help clean up the passenger cars or assist with baggage at small stations,” Hansen said.

Such pronouncements by Hansen were not only highly embarrassing for his successor as head of Transnet, Lothar Krauss, but also evidently went too far for DB boss Mehdorn. Krauss declared he was “hopping mad” over Hansen’s comments, while Mehdorn quickly assured the public that the company had no plans for reducing personnel. Rather, “in the course of the partial privatisation there would be no compulsory redundancies before 2023.” Spokesmen for the German government immediately confirmed Mehdorn’s comments.

It should be noted, however, that the railways management has shed tens of thousands of jobs since the rail reform of 1994. In preparation for its stock market privatisation, the workforce of DB was cut by half to its current level of 185,000. All of these job cuts were carried out in the closest collaboration with Transnet and the other rail unions, and without management resorting to compulsory redundancies. Natural attrition, retirement packages and occupational alternatives were sufficient to achieve the desired job cuts.

Prior to the official decision to privatise DB, management had already announced its intention to form 30 new subsidiaries with the declared aim of competing with rival private companies. Those employed in these subsidiaries are supposed to receive the same wages as those working for the mother company. However, they will be expected to work longer hours and will receive less vacation—in effect, a cut in wages. The major Deutsche Bahn holding company, DB Regio, defended the plans to create subsidiaries by declaring that labour costs are a crucial factor in ensuring competitiveness.

Panic in Transnet

Nearly a month after the switch by Hansen from Transnet into the executive committee of the partially privatised DB, an atmosphere of panic reigns inside the headquarters of the union. Ordinary members are outraged at the arrogant and provocative stance adopted by the union’s former chairman. Many have declared their intention of resigning from the union, though the bureaucracy refuses to give a concrete figure.

Hansen’s abrupt move has animated lower- and middle-ranking bureaucrats to attempt to restore the tarnished image of the trade union. The website of the union grouping “rank and file rail” is full of requests and resolutions from local groups and shop stewards calling for a special congress of the union to enforce the resignation of the entire executive committee and clarify the background to Hansen’s endorsement of the rail privatisation plans. They also demand his expulsion from the union.

Shop stewards from the northeast district are demanding a new start for the trade union, legitimised through a democratic process. “The policy of co-management has failed,” they declare in their letter. “The acting executive committee, which expressly approved the past course of action, must resign. The background to the switch made by Norbert Hansen (from union boss to DB labour director) must be completely cleared up.” Many other regional bodies of the union have made similar protests.

The Transnet executive has also been subjected to severe criticism for its role in the privatisation. The spokesman for “rank and file rail,” Hans Gerd Oefinger, who has opposed privatisation for the past eight years, declared: “The functionaries around Hansen prevented any open discussion about privatisation.” Hansen was able to hoodwink the Bundestag parties and pursue his own personal goals, he said.

However, it is the union officials who allowed themselves to be hoodwinked. Having worked closely with Hansen for many years, his switch over to management is a source of great embarrassment for the bureaucrats left behind. The new Transnet chairman Krauss quickly sought to strike a radical pose and declared his opposition to cheap wage labour on the railways. He also rejected the plans for the liberalisation of passenger transport put forward by DB Regio. Transnet executive member Karl-Heinz Carpenter also expressed his fears that the liberalisation plans envisaged by DB Regio would undermine the existing wage contract system that applies to all rail workers.

Krauss put forward the pathetic demand for an obligatory minimum wage for the industry of a sum “clearly in excess of 5.50 euros per hour.” He threatened to respond with strikes and protests if there is an attempt to break up the existing contract structure. In this respect he declared that he would seek to unite with other German trade unions—in particular, the public service trade union Verdi.

Transnet members should take a thoroughly critical attitude to Krauss’s proposals. The recent contracts agreed by Verdi—including that negotiated with the Berlin transport company (BVG) a few weeks ago—demonstrate that Verdi is as intent on policing contracts on behalf of the employers as Transnet itself. In this respect, the two unions have worked hand in hand for some time. Both Verdi and Transnet united to publicly condemn the 31 percent pay demand made by train drivers last year, and the minimum wage of 5.5 euros proposed by Krauss is indicative of the path chosen by the unions. The miserable sum is even less than the legal minimum wage of 7.50 euros demanded by the Federation of German Trade unions (DGB).

“Rank and file rail”

Under these conditions the trade union grouping “rank and file rail” plays the role of a left cover for the bureaucracy. The group calls for the cancellation of the privatisation plans and for the democratic control of the European transport system by transport employees and the population as a whole. But such aims cannot possibly be implemented without breaking with Transnet and its entire union perspective—a line of action that “rank and file rail” vehemently rejects.

The system of co-management—i.e., the close co-operation between trade unions and management—that has now culminated in Hansen’s move into the DB executive is not just an issue of the corrupt practices of individual trade union leaders. It is the direct result of the union’s perspective of reforming capitalism. Under conditions of the globalisation of production and a burgeoning international finance crisis, a trade union perspective, even in its most militant form, is utterly incapable of challenging the constantly growing pressure of the capitalist economy to maximise profits. Such a struggle requires the building of a political movement of the working class, which fights for a socialist alternative to the capitalist system.

Until recently, the trade unionists organised in the “rank and file rail” grouping had evidently set their sights on the Social Democratic Party for progressive change - even though this party has filled the post of Federal Transport Minister for the past ten years and has been the main driving force behind the privatisation of the railways.

Following a speech by SPD chairman Kurt Beck on April 19, in which he told SPD congress delegates that he ruled out any privatisation in excess of 24.9 percent and declared that denationalisation was not the solution to every problem, “rank and file rail” issued a sigh of relief. “Thank God there is an end to the superhype that everything in private hands is good and inexpensive,” it wrote. “We must once again talk reasonably over securing our existence.”

Ten days later, however, the SPD joined its partners in the grand coalition government to vote in favour of partial privatisation. Nevertheless, “rank and file rail” continued to maintain that pressure on the government could prevent privatisation. In its leaflet produced for May Day, the group declared, “No railway share has been sold up to now. We must increase the pressure on those governing, in order to ensure that they keep their fingers out of the capital privatisation of the railways.”

For disillusioned Transnet members, any switch to the rival union of train drivers—the GDL—also represents a dead end. When GDL raised its demand last year for a substantial pay rise and its own contract agreement, other rail workers saw the possibility of a mobilisation to reverse years of continual wage cutting and degradations in working conditions. However, after eight months, the GDL leadership pulled the plug on its labour disputes despite the militancy of its members who had won considerable popular support. The GDL leadership signed a contract involving a minimal wage increase, which fits in smoothly with the contract structure worked out by DB management with the other rail trade unions.