Privatization and the Crisis of Bus Drivers in Santiago

Early in the morning of June 2nd, 2014, Marco Antonio Cuadra walked into a bus depot as he had done for his preceding 25 years as a bus driver in Chile’s sprawling capital city. This morning, however, instead of setting out to cover his routes across Santiago, he doused himself in gasoline and set himself on fire, shouting, “This is for the workers! Let it mark a precedent!”  By the time his coworkers grabbed fire extinguishers from their buses and doused the flames, 90% of his body had been severely burned. Waiting for an ambulance to arrive, one of the drivers asked Cuadra why he taken such drastic action. The pained response (as seen in an extremely graphic video uploaded to Youtube): “For our coworkers – because of how [corporate managers] abuse us, how they don’t pay our wages, and how they fire union leaders, but nobody complains. ¿Hasta cuándo?”

Two weeks earlier, Veolia, through its Transdev branch and Chilean subsidiary Redbus, had initiated the firing of Cuadra, a leader of Redbus Union 2. The company claimed he and the treasurer of the Union failed to fulfill “the obligations expressly indicated in their work contract.” Other employees dispute this claim and note that Veolia/Redbus, a private operator for the public Transantiago/Metropolitan Public Transport Directorate, initiated the firing three days before employees were set to present a new collective bargaining plan.

The ambulance took Cuadra to Santiago’s main hospital where he underwent a series of amputations and surgeries as his organs progressively failed over the coming weeks. His wife shared her thoughts in an interview:

A memorial for Marco Cuadra in Central Santiago (picture from Laurel Paget-Seekins)

A memorial for Marco Cuadra in Central Santiago (picture from Laurel Paget-Seekins)

He was distraught because of all the injustice. He was enraged when he saw how [Veolia/Redbus] made the older drivers, and the workers in general, work very late, how the company didn’t respect them, and how they had to use diapers because of the lack of bathrooms and the length of the routes… I pray to God that he’ll come through this so he can tell me what really happened. What I think now, based on what I saw and what his coworkers have told me, is that it was a result of utter frustration, the most extreme frustration that a human being can take.

On June 27, twenty-five days after his act of desperation, Cuadra died from his injuries.

After Cuadra’s death, workers aligned with the Coordinadora de Trabajadores del Transantiago called for a national strike in July.  A pro-labor blog editorialized, “The sacrifice of comrade Marco Cuadra is a scream suffocated by the terrible silencing of a labor law created in the dictatorship, which has been tied to the unjust treatment of thousands of workers during more than 30 years.”

Indeed, before trying to understand Cuadra’s death, it is important to understand the history that led to it.

How has the privatization of transit in Santiago evolved historically? And, as a second question to guide the discussion below, are the problems that have emerged from this history of privatization unique to Chile?

The Road to Transantiago

Though Transantiago’s operations began with a “traumatic” restructuring of the Santiago transport system from cartels of bus owners to a regional trunk-and-feeder system in 2007, the driving economic rationale behind it goes back as far as the 1950s and the Chicago Boys. The Pinochet dictatorship applied their market-based model across society, which, according to Professor Javier Couso, “completely undermined the concept of citizenship by transforming social rights (like education, health care, and social security) into individual problems.”

Though Pinochet transferred power to a democratically-elected president in 1990, Chile’s constitution kept in place many of the dictatorship’s pro-market and anti-labor policies. Since then, in fact, the percentage of workers represented in collective bargaining has been cut in half, to 8%, and employers are able to replace striking workers without restriction. Couso summarizes:

The motto “market solutions to public problems” sums up the radical nature of Chile’s neoliberal model…

In contrast with the adherence of technocratic elites to neoliberal policies, regular Chileans are deeply uneasy about the economic model. As early as 1998, a series of studies undertaken by the United Nations Development Program (UNDP) reported widespread discontent among the general population towards the radical brand of neoliberalism prevalent in the country. The problem, however, was that the failure of the model was experienced by individuals in isolation, which often led them to blame themselves for their failure to make ends meet rather than faulting the rules of the game. Thus, a typical Chilean response when asked about the state of the nation was: “The country is doing well, but I am not.”

Perhaps this complaint echoes Cuadra’s “utter frustration.”

The government’s zeal for neoliberal ideology helps explain why, even in the administration of President Lagos of the Socialist Party, Transantiago:

did not include a single public bus line…[O]ne of the experts involved in the design of the Transantiago… explained that “it would have been considered ideologically ‘leftist’ to even suggest the introduction of a public bus line to run public transportation.”

It was within this privatization framework that President Lagos’s Minister of Transport, Javier Etcheberry was tasked with reforming Santiago’s cartels of private bus owners in the early 2000s. He actively tried to recruit foreign private operators, recalling, “What I explained to foreign firms was our long term vision. While they could start by operating only two trunk units, contracts for the other business units would have a short duration and soon be re-tendered, and thus foreign companies were told that they could eventually expand their presence.”

Courting Veolia

In France, Minister Etcheberry piqued the interest of Veolia, which had initiated waste management operations in Chile in the 1990s and owned part of one of the operating companies of Bogotá’s Transmilenio bus rapid transit system. Veolia decided to forgo bidding on a small feeder operation tendered by the government in 2002 as a pilot program. In 2004, they agreed to participate in the round of major tendering for Transantiago. Veolia was outbid in their pursuit of Transantiago’s “crown jewel” trunk units by firms with strong political connections and Colombian and Korean capital, leaving the French company “furious” (according to an interview with Minister Etcheberry in this dissertation). They kept close tabs on Transantiago, however, and in 2006 when the owner of the local operator that had won the pilot feeder bid decided to pull out, Veolia bought them out. Red Bus was reportedly purchased by its previous owner for $9 million and sold to Veolia for only $1 million.

The reputation of Redbus under Veolia was initially solid. In 2009, the national federation of drivers’ unions voted it “best company in the country for its social climate.” Veolia’s service was also highly regarded through operational indicators and passenger satisfaction surveys, leading the government to award them the contract for an additional feeder zone in the 2011 round of retendering. These new three-year contracts were worth 300 million euros, allowing Veolia/Redbus to expand to 10% of the total Transantiago bus fleet and 2,300 employees.

The Romance Sours

After Veolia/Redbus was awarded the extended contracts, service quality deteriorated markedly.

By August 2012, passengers were fed up. One afternoon, people at a stop for Route C10, which was scheduled to arrive every five minutes, waited four times longer, then began spontaneously protesting in the streets.

The president of the Transport Commission, a conservative legislator named Gustavo Hasbún, diagnosed the protest by the Route C10 passengers as follows:

This is the second protest emerging from a problem with Redbus. During this year they began to take buses from other zones to solve problems whenever people complained. When people stopped complaining, obviously Redbus returned the buses that they had been using to supplement service in the areas of complaint, and the complaints arose again. So we have here a structural problem – there is a problem in the business model of the company and clearly drastic means must be taken. The people cannot keep bearing the cost…

We expect that measures will be taken to protect the rights of Transantiago’s users….

Clearly the people grew tired of seeing abuse and supposed promises that have not been fulfilled.

He called for the termination of Veolia/Redbus’s contracts after the riders’ spontaneous protest:

It is not enough to just charge fines to the companies when they already have them internalized in their costs. We need to be much harsher and, in this case… I believe that it’s appropriate for the Minister of Transport to evaluate terminating Redbus’s contracts, because this situation is clearly affecting the quality of life of many middle- and working-class Chileans.

Since winning the expanded contract, Veolia/Redbus’s relationships soured not only with riders, but also with drivers. The company was fined by the Chilean government twice in 2012 for illegal labor practices. Yet drivers felt Veolia saw these fines as merely a cost of doing business, and many of their other grievances went unaddressed.

In particular, employees accused Redbus of violating multiple national labor and health laws, through illegal contract modifications, unpaid overtime, absence of a workplace safety and training committee, insufficient timeclocks and payroll tracking, lack of provision for water and restroom facilities, deficient vacation time, erroneous paychecks, inadequate communication of benefits, and threats of frame-up terrorism charges. Finally, when Veolia’s used threats against workers in an attempt to force them into signing contracts with major concessions, the workers went on strike in November 2012, explaining:

We have seen no response from the formal process where we have filed complaints, and in which demands were outlined in response to labor infractions, so the workers themselves protested spontaneously, without any leadership, because they are tired of the abuses and labor violations that Redbus perpetrates… We lack only chains to be enslaved.

The Minister of Transport for the conservative Piñera administration, while acknowledging that the strike was technically illegal, called Veolia/Redbus responsible and demanded that they reach an agreement with the workers: “[The drivers] have fulfilled their role very well and very responsibly in the past, so of course the companies must reach an agreement with them.”

After five days of striking, a march with allied groups to the Transport Ministry Offices, and intense negotiations, the company agreed to back down from their demands and reinstate the workers who had gone on strike.

Veolia/Redbus continued to engage in tactics both hidden from public view and of questionable legality after the strike. At the end of 2013, the government allowed operators to increase the prices they charged for service in an unpublicized round of renegotations, since many of them claimed to be near bankruptcy (symptomatic of the lowball bids many made). Veolia extracted one of the highest increases in the price per passenger transported it charged to the government – about 40 pesos for each boarding, amounting to millions of dollars annually. So while bragging of profitability to investors, the company was begging to siphon more money from Transantiago, and ultimately, riders.

Even more concerning are the alleged ties between Veolia/Redbus’s management and Luis Campos Salas, who stifled dissent and falsified documents for pro-business unions. Twenty-four such unions were shut down by the Chilean government in response to an investigative report in September 2014. The report alleges that Luis Campos collaborated with Redbus management to suppress labor complaints while siphoning union dues into his personal account. As a national union federation leader, he recruited Marco Cuadra to the Redbus union, only to undermine and silence union grievances.

Such was the malfeasance against which Marco Cuadra made his last stand. Advocates of privatization often claim that establishing a profit motive will encourage efficiency and innovation for the benefit of the general public. In the case of Veolia/Redbus in Santiago, it seems to have instead encouraged unethical and illegal practices that harmed both workers and the general public.

Some might think that these egregious examples are unique to the history and neoliberal system of Chile. But a review of Veolia’s record in other countries shows a similar pattern of profit-driven abuses of labor and the public trust.

Veolia at Home

Privatization of transit systems in the US is increasing; 36% of peak hour transit vehicles in the United States were operated under contracts in 2010, compared to 26% in 2002. Politicians advocating austerity bring in private operators to reduce compensation for public employees while insulating themselves from the political repercussions of reduced service; private transit drivers receive, on average, 52% less in compensation than public ones. In addition to paying lower wages and seeking less experienced drivers, private contractors also have incentives to reduce maintenance and training costs; this may explain crash rates that are 70% higher, and breakdown rates that are 36% higher, than publicly operated transit.

Veolia is a broad environmental services conglomerate, and its transportation subsidiaries have many names, including Transdev, which employs approximately 16,000 people in North America.

Veolia and it subsidiaries’ violations of ethics and fair labor practices in the United States are legion.

In Phoenix and Tempe, the National Labor Relations Board found Veolia to have engaged in “‘regressive, bad-faith, and surface bargaining,’ and numerous other unfair labor practices” leading up to a 2012 strike. An alleged conflict of interest involving Phoenix’s mayor also prompted a Federal Transit Administration inquiry.

In Las Vegas, Veolia was ordered to stop “interfering with, restraining or coercing its employees in the exercise of their right to self-organization” in 2012.

San Francisco’s BART brought Veolia’s Vice President of Labor Relations into negotiations that eventually resulted in a 2013 strike during which two track workers died; a subsequent report commissioned by BART’s own board concluded, “Many see the hiring and promotion of [Veolia’s] Tom Hock to lead negotiations as a mistake. While some who were in bargaining stated that he was very competent and professional, others said his style was arrogant, dismissive, and he often appeared disengaged.”

In Massachusetts, Veolia had a stake in a commuter rail operator that took advantage of questionable fine reductions and double billing uncovered by the state auditor in 2011. Veolia subsequently lost its bid to renew this operating contract, but it did win a contract to run Boston’s school buses starting in 2013. Relations with the School Bus Union quickly devolved, leading to arrests on trumped up charges. And in 2014, a former Veolia/Transdev executive was appointed to head Boston Public School’s transportation division; the apparent conflict of interest gives little reason to hope for contract enforcement that will benefit students, families, and the public.

With various tentacles around the world, Veolia profits from abusing workers’ rights. Perhaps they are not experts in transit or sustainable mobility, but in implementing the mandates of the recent austerity craze, squeezing workers and service while siphoning away profits.

PulpoVeolia

Veolia the Octopus

Winter in Santiago

As June’s gray weather advanced in Santiago, a union publication declared it would be “another harsh winter for workers” in Chile. Partly in response to Marco Cuadra’s death, unions announced a one-day protest on July 3 as well as a possible strike of 3,000 workers across Transantiago’s different private operators if coordinated collective bargaining fell through. A leader announced, “Together with the inter-union working group and Redbus, which is one of the companies which has the greatest quantity of anti-union practices and worker abuses, we want to see together what particular means for the security of workers we can approach.”

Despite reported police intimidation and management threats at bus depots on the morning of the protest in memory of Cuadra, hundreds took to the streets. Part of the protest’s message was, “It is the profit of businessmen through public transit that generates the transit system’s crisis. In this crisis of Transantiago, along with the passengers, we the workers are the victims of profit. But we are portrayed as the movie villains, the visible face of the poor quality of the transit system.”

Protest

“Mr. Minister: The fault is not the worker’s, but rather the exploitative businessman” (from Flickr user El_Ciudadano)

 

Chile’s Labor and Transport Ministers also convened a roundtable on drivers’ rights in response to Cuadra’s death. Multiple unions eventually withdrew, however, objecting to the participation of the aforementioned Luis Campos Salas, who in November will be formally charged with fraud for the creation of fake unions. With little progress made through the roundtable or other negotiations, it was indeed a harsh winter for workers.

On September 29th, 2014, a driver for another Transantiago contractor, Juan Cerda, committed suicide. He had been “pressured to return to work” despite a depression diagnosis, violating Chilean law. A union leader lamented, “We have had various cases of this practice, which puts the driver and passengers at risk. Although the case of Marco Cuadra is well known, the truth is that since [2007] we have had approximately 30 suicides.”

 

¿Hasta Cuándo?

The day after Cerda’s death, a federation of Transantiago unions put out the following statement:

Transantiago is the creation of the state and the political class to favor the businessman, facilitating his enrichment with money from all Chileans. This includes the deal-making behind closed doors, the lack of enforcement, and the token fines. The question is, who investigates the different administrations that have made the contracts and overlook enforcement? It is not enough to enforce contracts today to calm the waters, so that tomorrow everything will continue the same…The businessmen seek every means possible to prevent the workers from organizing and fighting for our rights. The examples recently uncovered do not just happen in Transantiago, but it is the everyday practice of management in all of Chile. Not only are there fake unions, bribes, the trading of membership, extrajudicial agreements before proper termination proceedings, and corruption in leadership, but also psychological pressures, black lists, bullying, and physical aggression. And again, the state in general, and the Labor Inspectors and Department in particular, overlook them. It is yet again the collusion between the state and the businessmen against the workers. It is silly to think that dissolving the 24 fake unions will solve the problem. Where are the real solutions?

A week later, on October 6 (Monday), 800 workers for operator Subus went on strike. The crisis erupts again.

With Transantiago operating contracts expiring soon, and workers starting to organize across different operating companies, perhaps there is hope for drivers. They demand public operations of the public transit system, and as riders grow increasingly tired of abysmal service levels, such public operation may soon be politically feasible.

But in the United States, where a mindset of austerity takes a deeper hold and privatization is on the rise, Marco Cuadra may be a harbinger of things to come.

"Transantiago Strike - No more anti-union practices | A new labor code for the workers | Negotiation by branch | State takeover of transport"

“Transantiago Strike – No more anti-union practices | A new labor code for the workers | Negotiation by branch | State takeover of transport”

Buses of Santiago

After last week’s rant, now back to your regularly scheduled program.

An urban design and transportation engineering team from Santiago came up for a visit to MIT last week. Next fall, a joint MIT-PUC workshop will be focused on BRT corridor planning in the Boston area and for Transantiago. In anticipation, here are some photos from my visit to Santiago last summer:

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Buses of Ottawa

OC Transpo, the transit provider for Canada’s capital city, has a fleet of just over 1,000 buses.  The agency’s service area was home to just over 800,000 people in 2010, while average weekday boardings reached 384,000.  While the OC Transpo does provide limited diesel multiple unit (DMU) rail service, the majority of its riders use the Transitway bus network.  Inaugurated in 1983, this system of exclusive bus infrastructure speeds transit passengers from outlying suburban areas to downtown, with buses operating at their 56 mph speed limit along most of the route.   The Transitway has undergone continuous expansion, and now it handles 10,500 passengers per direction per hour in the morning peak.  But with buses passing in each direction every 20 seconds downtown, the downtown bus lanes are approaching saturation and will soon be replaced by an underground light rail link.

Pictures from a recent visit are below.  OC Transpo’s Flickr photostream also has an excellent collection of historical photos.

Seashore Trolley Museum

Pictures from the October operating day at Seashore Trolley Museum:

Warning: A size mismatch error occurred while trying to fetch the photos (the album reported 158 entries, but only 100 were returned).

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Buses of Maipú

Many of the bus routes in the southwest parts of Greater Santiago have been realigned with the recently opened extension of Metro Line 5.

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Music on Transantiago

In general, there were less musicians and vendors on Santiago’s buses and Metro than I encountered in other cities’ transportation systems. One exception is the scheming gringo shown in the video below – he may look familiar to my friends from high school.

Buses of Buenos Aires

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MyCiti – BRT Launched in Cape Town

The complete Phase 1A of Cape Town’s MyCiTi bus rapid transit system commenced operation in mid-May. It was originally planned to open in April 2010, but only the airport and stadium links were operational in time for last year’s World Cup. The BRT corridor and stations between Cape Town Civic Center and Table View were completed by this past January, but contentious negotiations with minibus taxi and bus operators led to a series of delays.

The political clashes and strikes leading up to MyCiTi’s implementation have their roots in historical difficulties regulating the informal minibus taxi industry:

In deregulating the minibus taxi sector in the late 1980s, and subsequently aiming to return to regulation through formally structured interventions such as the Taxi Recapitalisation Programme and the creation of a government-sanctioned representative structure (ie SANTACO), government has not created conditions conducive to the formalisation of minibus operating or business practices. Past interventions have, rather, contributed to the entrenchment of informal operating practices, the creation of ‘warlord’ figures fervently opposed to a loss of control of the sector; representative structures and operator associations well organised to violently disrupt the transport system and threaten public safety; and fluid loyalties within the industry. [Herrie Schalekamp, ACET Research Officer, in Mobility Magazine]

In one of the meetings I had with Herrie, he described the city as attempting to use BRT as an “infrastructural solution to a social issue.” Attempting to address transportation regulatory and governance issues by building dedicated rights of way and BRT stations would clearly lead to the “imbalance in work streams” characteristic of the project, with physical infrastructure delivered far earlier than operational and organizational structures. Further complicating the efforts to formalize and regulate the taxi industry (which receives no operating subsidies but generally pays no taxes) were unrealistic promises made by politicians and the lack of reliable data on existing operations.

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These two factors combined to confound the process of compensating existing minibus operators. At a national level, politicians promised that existing operators would not suffer any “legitimate loss of revenue” due to the implementation of BRT. Yet in most South African cities, revenue from legitimate minibus taxi operations is difficult to calculate accurately, especially considering the industry’s marginalized origins in the apartheid era. In Cape Town, transportation officials do not know accurately how many minibuses operate, or on what routes they operate, since so many minibuses are unlicensed. Given the promise to compensate existing operators for business taken by the BRT system, Cape Town officials must either offer jobs or monetary compensation to a growing list of (licensed and unlicensed) minibus owners whose routes will be affected. Officials agreed to compensate owners with unlimited permits for seven years of lost income, owners with limited permits for three years of lost income, and owners without licenses for one year of lost income. In agreeing to compensate unlicensed taxi drivers, they undermined earlier government attempts to negotiate only with legitimate taxi owners associations. The industry’s ongoing fragmentation has been a significant cause of delays to BRT implementation. As Herrie summed the situation up, “it’s a mess trying to regulate without the data.”

Cape Town’s private commuter bus operator, Golden Arrow, receives a R630 million subsidy annually, and has been another agent delaying MyCiTi’s inauguration. Golden Arrow was registering their concerns with BRT plans as early as 2008; in a 2010 speech at the South African Bus Owners Association Annual Conference, Golden Arrow’s General Manager FE Mayer objected:

The first and probably most important issue we have with BRT is that the concept was sold to Government on a false but convenient promise. The promise was that BRT will not need any operating subsidies. We say this is not possible and it will require more subsidy than current services require. In the recent past, Government has mainly held a negative view on the current bus subsidy system, and in most discussions it becomes evident they believe they are not getting good value for money. When they therefore heard that such a good system as BRT does not require subsidy, it was obviously an answer to their prayers. In itself it was enough for Treasury to buy into the concept.

Golden Arrow was clearly reluctant to give up their monopoly on subsidized road transport in the Western Cape. After two years of negotiations, they were able to pressure the City of Cape Town into letting them remain an independent operating company within the MyCiTi setup, instead of integrating with minibus operators to form a joint operating company as was originally planned. The Cape Times reported on the taxi industry’s displeasure at the city’s February capitulation to Golden Arrow:

This plan has annoyed TransPeninsula Investments [run by minibus leaders], which provided post-World Cup IRT services for the city. The company has already earned R1.5 million and R42.3m in two separate deviations from the city for the service. A senior executive of TransPeninsula said taxi operators concur about a third operator. “This will become evident soon. They want to give Golden Arrow their own company even though they’ve been having a monopoly for the last 150 years,” said the executive, who asked not to be named.

Transpeninsula threatened litigation, leading to further delays. Their recalcitrance is explained partly by the benefits they received from delays. As the provisional World Cup operator, Transpeninsula only was supposed to have contract for airport shuttle and special event operations (such as shuttles for the Cape Argus Cycle Tour) until October. Delays to BRT implementation meant extensions of their contract.

As late as April, officials were not confident that negotiations would be complete by May. The persistent effort of local and national government leaders eventually achieved success, and contracts were signed one day before the beginning of a phased rollout. The system has received generally positive publicity. With so many regulation and negotiation hurdles cleared, the implementation of future phases will likely be much easier.