Prudent. Minister Wopke Hoekstra (Finance, CDA) used that fine word at Friday’s press conference in his answer to the question whether KLM pilots have at least 20 percent of their salary. should to hand in. For example, it is stated in the letter to parliament about the support plan for KLM. Or become the high earners of KLM alone asked to hand in at least 20 percent, as stated in the press release?
Hard agreements have been made about KLM’s cost base, Hoekstra said. “Something has to be done about that. KLM also recognizes and recognizes this. But for us it is prudent to keep a distance. This is something between the companies, unions and employee participation. We don’t want to co-manage. ”
Also read: Only coalition positive about support for KLM
The difference between asking for or demanding a pay sacrifice is more than a language issue. It says a lot about the influence that the Minister of Finance wants to exercise within the private company KLM. How much power does the State derive from the EUR 3.4 billion support plan, with 1 billion as a direct loan and 2.4 billion as state-guaranteed bank loans? Would Hoekstra still want to be in the cockpit to steer?
On some issues, such as wages and working conditions for staff, the cabinet leaves the real negotiations to the KLM management. However, ministers are intensively involved in other areas, such as monitoring the use of state aid. And then there is the theme of sustainability, where the ambition to steer seems very limited.
Terms of employment
The most significant part of the support plan is cost savings. The unions believe that Hoekstra goes too far in its ‘restructuring’ of KLM, with a demanded ‘reduction of impressionable costs’ of 15 percent. This unavoidably has consequences for the working conditions and the unions should not interfere with that, the unions think.
To stick to the ‘strongest shoulders’ for a while: the pilots union VNV is ‘surprised’ that the cabinet and KLM have already made agreements about staff cuts, without any input from the unions. From the VNV response: “This strict framework actually dictates the outcome of collective bargaining and the precise reduction of individual working conditions.” In fact, “The Dutch polder model, based on consensus between social partners, has been pushed aside.”
Other KLM unions also reacted on Friday to the significant savings that the government and KLM have agreed. These were “sharp-edged negotiations,” says one of the parties involved about the talks between the government and KLM.
Another person involved, also on a background basis, says the consequences of the financial requirements for KLM are far-reaching. For example, as long as the support program is running, bonuses are taboo. “For KLM top management, 40 to 60 percent of the salary consists of variable remuneration. Some have lost more than half of their income for the time being. ”
But KLM employees with less generous incomes must also prepare for a wage sacrifice, Hoekstra reports to the House. He uses a graduated scale: the higher the salary, the higher the percentage that employees are in danger of being cut. “Wages from modal are lower percentages, rising linearly to 20 percent.” The interpretation is up to the company and the unions, according to the minister.
The bottom line is that the Ministry of Finance has set a goal with regard to the terms of employment and leaves it to the employer and employee to fill in. From a financial perspective, this is a modest interference, from a unions perspective, this is a far-reaching intervention.
Then there are the requirements for sustainability. This is much less of an intervention. The Cabinet’s conditions for KLM in this area are best efforts obligations.
KLM must contribute to the ambition of CO2reduce emissions by 2030 to 2005 levels and halve by passenger-kilometer. KLM is also committed to 14 percent admixture of sustainable fuel in 2030. Now KLM is 0.18 percent biofuel. At the press conference, replacement of short-haul flights by the train was added.
These are objectives that the government has already formulated before, to which KLM has now explicitly committed itself. Minister Cora van Nieuwenhuizen (Infrastructure, VVD) acknowledges that the signature of the goals is the only new aspect of these conditions.
The announced reduction in the number of night flights seems more concrete, but in practice also appears to be far from implementation. The first step, from 32,000 to 29,000 night flights per year, is an existing goal. A further reduction to 25,000 night flights is linked to the opening of Lelystad Airport. No night flights are allowed there.
For example, a reduction in the number of night flights still seems a long way off. Local residents are diametrically opposed to KLM and Schiphol on this subject. Night flights are important to KLM: they form the link between the European and the intercontinental network.
In another subject, the Cabinet clearly opts for influence and direction. That is the supervision of the state aid that will be paid later.
The name says it all: there will be a new official, a ‘government state agent“. In other words: a confidential advisor who checks whether state aid for the ‘blue family’ is being spent lawfully and whether KLM complies with the conditions for the aid.
The function is new, but the rationale is as old as the first support actions for individual companies in the 1970s, such as for shipbuilding group RSV.
Someone must supervise the use of tax money. The company is accountable to the inspector, the inspector to the minister, and finally the minister to the House of Representatives.
Industry pope Joseph Molkenboer played that role in state aid in the 1970s. He was a senior official in the Ministry of Economic Affairs and often a supervisory director of a company that received support. Sometimes he was an observer at supervisory board meetings.
But it was not satisfactory. His role as a supervisory director was particularly controversial. How could he be obliged as a commissioner to serve the interests of the company, while as a supervisor on behalf of the government he had to put the state’s interests first?
In the next economic downturn, in 2008 and 2009, the government saved several banks. Some received temporary support, such as ING. Commissioners came again on behalf of the government. For example, they had to pay attention to the top rewards. They faced the same conflict of loyalty. Am I here for the taxpayer or for the company?
ING received support, other banks were even nationalized: ABN Amro, Fortis Nederland and SNS Reaal. The shares that the state bought in this way were managed by a new foundation, NLFI. No government commissioners here, but founding board members who, the book shows The state bank about ABN Amro, together with civil servants and successive ministers played the role of shareholder. Also confusing and cumbersome.
Of state agent must monitor the use of the aid (only for KLM, not for Air France or the holding company) and compliance with the conditions.
This confidential counselor will have to shape his or her role himself. The agent may join KLM Commissioners, Hoekstra said Friday. Neither KLM nor Air France-KLM is happy with the state agentinsiders say. The potter has a stick behind the door: KLM will receive the loan in installments. In case of default, the state agent can block the following payment to KLM, the Ministry of Finance confirms.
Hoekstra and Van Nieuwenhuizen are most enthusiastic about their incantation of a long-term fear. To understand that a little bit of history. When KLM merged with twice the size of Air France in 2003, the Dutch government was afraid of French power politics. That the group would direct passengers to Charles de Gaulle Airport in Paris. That Schiphol would then decline to a regional airport. A shrinkage scenario would wait for KLM. That is why agreements were made for eight years that Schiphol and Charles de Gaulle should both remain international hubs. The dual hub as a pillar of Air France-KLM.
These agreements were called “state guarantees”. The guarantees for Schiphol’s position were extended indefinitely in 2010. Air France-KLM did negotiate a nine-month notice period.
Fears that the group would once take the opportunity to belittle Schiphol (and KLM) arose when the Dutch-French tensions in the group became increasingly pressing. While KLM flourished partly due to strict cost control, Air France lost ground. At the KLM headquarters in Amstelveen, there were continuous attempts by ‘Paris’ to attract control, jobs and cash.
The unexpected purchase by the Netherlands of 14 percent of Air France-KLM shares in early 2019 was partly prompted by this fear. The cabinet wanted to use these shares to exert pressure to strengthen Schiphol’s position. The French were furious.
That is why Hoekstra and Van Nieuwenhuizen now celebrate the extended notice period of the state guarantees as a victory. From nine months to five years. Van Nieuwenhuizen spoke about ‘the most important strategic interest’. “Then, if we say a weird French government, we have five years to keep them from it.”
The question is, however, what the new notice period of the not very firm agreements is worth if a conflict ever breaks out. But in the short term, the meaning is concrete: the cabinet has saved KLM so that Schiphol’s position could also be secured.
A version of this article also appeared in NRC Handelsblad on June 27, 2020
A version of this article also appeared in nrc.next dated June 27, 2020