Households can give Dublin Bus no more

Tom Waits is always right. The large print giveth, and the small print taketh away. Let’s look at the small print of the Dublin Bus pay dispute by going through the company’s annual accounts from 2008 to 2015.

(You can learn a lot from annual accounts, including how they are presented. Every year since 2008, Dublin Bus has really, really wanted you to know that some of their bus drivers are women, for example. There are pictures of female bus drivers everywhere. But I digress.)

First, the large print: Dublin Bus workers are striking in search of higher wage increases than the 8.25 per cent offered to them over several years by Dublin Bus in previous pay talks. They want 15 per cent to 21 per cent wage increases over several years. The strikes are expected to replicate the recent Luas driver disputes, in that they seek maximum disruption for maximum negotiating leverage. This behaviour pisses off customers, of course, but that is the nature of strike actions everywhere, all the time.

Employers typically use the media to appear reasonable while painting those striking as reactionary and greedy. Nicholas Jones’ Strikes and the Media is the best book I’ve read on the subject, using the coal miners’ strikes in 1980s Britain as his case study.

Despite being part of the CIÉ group of semi-state companies, at its core Dublin Bus is a company like any other. Every company is just a balance sheet of assets and liabilities, and needs to match the money it gets in – its revenue – to its costs, which include purchasing and maintaining the fleet, wages and salaries, and pensions. This is the logic of the profit and loss account.

Dublin Bus’s revenues fell by 19 per cent between 2008 and 2011, while costs stayed an average of around €200 million per year. When your costs are greater than your revenues, you incur an operating deficit. Dublin Bus ran an operating deficit from 2008 to 2012. In 2013, it recorded a very small operating surplus, and in 2014 and 2015, the surpluses have been relatively large at 11.6 per cent and 10.2 per cent, respectively.

Now imagine Dublin Bus was a 100 per cent private company in 2008, when the crisis hit. Passenger numbers fell from 143.5 million in 2008 to 115 million in 2012, before recovering slightly to 122.4 million in 2015. As passenger numbers fell in 2008 because people across the Irish economy were being laid off left, right and centre, any private sector company would scale back on its capital investment plans, cut its less profitable routes, lay off workers, reduce prices, institute wage freezes and insist on productivity increases for the demoralised bunch remaining. This is, largely, what Dublin Bus did. It instituted a redundancy programme, froze wages and worked to control other costs. (It did not reduce the wages of its most senior staff proportionally, with many being paid more than members of the cabinet throughout this crisis).

Unlike other companies, as its revenues fell Dublin Bus could not reduce fares to increase demand for its services. In fact, in recent years fares have gone up, on average by 7 per cent in 2009, 3 per cent in 2011, 15 per cent in 2012, 8 per cent in 2013, 5 per cent in 2014, and 5 per cent in 2015. It has to apply to the National Transport Authority for any fare change, but this august body pretty much always says yes.

So as its market share decreased due to increased competition from private bus companies, and as it implemented cost-containment and productivity measures likely to annoy the 3,000-plus who work for it, Dublin Bus increased prices for those households who need to take the bus to work and to school. Odds are these households aren’t the richest ones in the state, either. The household sector, then, helped bail out Dublin Bus. One reason Dublin Bus can’t cut back substantially on services is that it fulfils a public service obligation, and its workers enjoy the security and pension entitlements of being part of a semi-state organisation. So its wage costs are relatively fixed, and it can’t scale back services like a private operator can.

Dublin Bus receives a payment from the state for providing bus services to areas where private sector buses would not go, because they wouldn’t make a profit. This public service obligation payment has fallen steadily from €85.6 million in 2008 to €57.7 million in 2015. So as the state reduced its payments to Dublin Bus, the household sector increased its payments. This has happened in other sectors, notably higher education, where reductions in direct state funding for higher education were replaced with increased contributions from households.

So this is Dublin Bus in 2016. A company facing increased competition from the private sector which will erode its profitability into the future, chained to a public service mandate, with a decreasing subvention from the state, and workers demanding a part of the surplus it generated in 2014 and 2015. The company has had revenues go higher than costs for only three years. Wage increases are a good thing, and I support the workers in their claims, but they need to be based on the facts. If Dublin Bus workers get more wages because the company can always increase its prices for poorer consumers, that is hardly fair. If Dublin Bus enjoys a competitive advantage through its state subsidy on some other routes, again that is hardly fair. The taxpayer should not ride to the rescue of the bus drivers.

But it is also the case that workers have complied with management’s needs for increased productivity.

The logical outcome of the talks is that employers agree to a formula of sharing any surplus with workers above a certain prudential target, say 4 per cent of operating surpluses. This would result essentially in bonuses for workers who achieve the company’s objectives. If this ran in 2015, the 3,313 workers would share around €6 million, and receive €1,800 each gross on top of their basic incomes. With bus drivers earning between €30,000 and €45,000 annually, this is a 6 per cent and a 4 per cent increase respectively.

Dublin Bus does good work, and its workers do deserve wage increases as the company recovers, but this can’t be at a cost to the taxpayer. Shane Ross needs to keep his purse-strings shut and let the two sides work it out.