Thursday, 21 February 2013

Of taxis, deflation, crisis and strikes

In Wroclaw* on Monday, I noticed that the taxis there were more expensive than in Warsaw. They do not prominently display the fare per kilometre in the rear passenger door as they have to in Warsaw. Furthermore, from what I can see online, there's a maximum tariff set by the city authorities, and that's the fare that all taxi firms charge - namely 3zł (60p) a kilometre. Taxis in Wrocław compete therefore on service.

Here in Warsaw, there's a free market. Good for the passenger, economic hardship for many taxi drivers - but - it's a free market.

To see how it works, approach a busy taxi rank, like the one at Metro Wilanowska, my regular transport hub (below). There's a long queue of taxis which can reach 150m in length during rush hours, with up to 20 taxis waiting to take you away. It's a free market - you can choose. Prices are displayed. They range from 3.00zł (the guy in the white PT Cruiser that's always standing at the head of the queue - people ostentatiously ignore him and his prices) to 1.60zł (the elderly guy in the green Corolla). If you phone for a taxi (EkoTaxi or Bayer, for example) rather than get one from a rank, you can get lower rates (1.40zł/1.50zł respectively).

For an 8km journey, after 22:00 when the night tariff cuts in, the difference becomes significant. So at Wilanowska, I'm looking for taxis displaying a fare that's 2.00zł or lower. The guy charging 3.00zł has his pride. He looks after his PT Cruiser. It has low mileage. And it will stay that way.

I often wonder about the economics of running a taxi. The more you drive, the more you pay in fuel and repairs. But you can't get much work if you're charging high prices. It should require the finesse of an economics graduate to model the optimal tariff - one that attracts custom yet covers costs. Talking to a Bayer driver, he's happy that he spends little time standing, yet makes only a handful of grosze per kilometre (many Bayer drivers own seven-seater people carriers which exempts them from some taxi regulations, these are expensive to run).

The Warsaw taxi driver has been forced by the market to take a cut in living standards. I'm minded of the Łódź security guard on 5.30zł an hour. Inflation is fizzling out. At the lower end of the labour market, wages are being forced down, people are losing their jobs. Unemployment - though still way off the pre-EU accession rates (23% in February 2003) - is creeping up and people are feeling it.

A few weeks back I was at a meeting at which a railway trade unionist spoke about sentiment among his workers, aggrieved at the proposed cut in travel concessions for railway workers' families, would go out on strike and the whole nation will follow.

Twaddle. As finance minister Jacek Rostowski rightly pointed out, strikes in Poland - the big ones, on a national, historical, scale, have always been prompted by inflation, not by unemployment. Strikes today are limited to state-owned industrial workers striking to protect their privileges (usually at the cost of the unemployed).

Times are getting tougher across Europe. The Spanish and Greeks, who've been overpaying themselves for years within the eurozone, must face swingeing pay cuts, as their economies don't have the safety valve of currency depreciation. Here in Poland, which does have such a safety valve, the market is pushing wages in the same direction. Talking to recruiters, I hear that in senior managerial positions, salaries being offered are lower today than back in 2008, so it's happening across the board.

Although Poland's economy is not in recession (and it is unlikely to stop growing), the economy is growing weakly, and you can feel that. For consumers with money still in their pockets, living will become cheaper. For those without, it will become harder. Warsaw's free-market taxis are a bellwether, a portent, a lead indicator.

* Ilona from our Wrocław office claims that Wrocław is generally dearer than Warsaw - property prices, shopping, restaurants. Less regulation and more competition drives prices down.

This time last year:
Lent starts again

This time two years ago:
Art Quiz

This time three years ago:
A month before Spring Equinox

This time four years ago:
The beauty of winter
[some of my finest winter photos]

1 comment:

student SGH said...

Good starting point for ample discussions. Need to catch up definitely...