UK Rail Firm Paid Shareholders £500-M Then Cut Workers Wages

According to Adam Bychawski of openDemocracy, a UK railway operator paid out nearly £500 million to shareholders last year before notifying rail unions that employees needed to take a real-terms pay drop to stay afloat.

Photo Insert: The Transpennine Express

On Tuesday, more than 50,000 train workers from 13 different train companies went on strike for three days. The National Union of Rail, Maritime and Transport Workers (RMT) announced the strike in response to the corporations' proposals to reduce jobs and real-terms wages, as well as deteriorate working conditions.

Rail executives have stated that a cost-of-living wage increase, which is one of the RMT's main demands, is “not sustainable in the current economic climate.”

The Rail Delivery Group, which represents rail businesses, said it had rejected a cost-of-living pay increase because it would be unjust to taxpayers given the government's emergency financing for the industry during the pandemic.

However, just last week, FirstGroup, the UK's largest train operator, claimed to investors that profits for this year were "ahead of expectation" and promised to resume dividend payments.

In December 2021, the business paid its shareholders £500 million, just months after being awarded government contracts to run the South Western Railway and Transpennine Express. In 2020, the CEOs of the six largest train companies earned a total remuneration of more than £5 million.

In a statement at the time, FirstGroup stated that the contracts have “no revenue risk and very limited cost risk,” and that the new arrangement “works better for passengers and taxpayers, while generating more resilient and consistent returns for shareholders”

Abellio, another leading operator of rail services in the UK, and responsible for hundreds of thousands of services every day across England and Scotland, contributed €355m (£305m) to the profits of its sole shareholder – the Dutch state railway – according to the latter's 2021 annual report.

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