The productivity of the Finnish State Railways 1945–1989
Introduction
This study examines the operations of the Finnish State Railways during the post-war period. The main emphasis of the study is on assessing the development of productivity and analysing the factors influencing it.
The study is situated at a time when question marks still hang over the future development of the Finnish State Railways. The volume of services produced by the organisation has not grown anywhere near as rapidly as other transport. The organisation is only now beginning to emerge from the financial problems caused in part by the relatively weak demand for its services. One means of meeting the challenges of the future has been to change the operating principles of VR: the transition from a budget-dependent public enterprise to a new-model public enterprise with an emphasis on commercial profitability and accountability. As a new-model public enterprise, VR is divided into two separate divisions: track maintenance and the operation of transport services itself. The latter division is required to achieve the best possible commercial result.
The principal task of this study is to examine the development of VR’s productivity and the factors influencing that development. The study adds to the debate on public sector productivity. It is common to label public sector agencies and organisations as inefficient and characterised by slow rates of productivity growth. This thinking is not, however, based on any comprehensive survey, but at most on fragmentary studies.
This study examines and analyses the productivity development of one organisation, the Finnish State Railways, over a comparatively long period, from 1945 to 1989. It is well known that efficiency and dynamism in an organisation are characterised by rapid productivity growth. VR’s productivity growth figures can therefore also yield conclusions about the efficiency of the organisation in question. The focus is not on comparing different railway organisations, although the study does include a section examining the productivity of various European railways.
With regard to VR, the study also examines the factors that have contributed to productivity growth. The research findings also provide indicative information on VR’s cost structure, production technology, and pricing principles.
Productivity is assessed using almost the same method as in the study on the Finnish Customs Service (Lehto 1989). The method used in the Customs analysis is particularly well suited to the analysis of railway services in that railways too produce a range of different services.
The services of the Finnish State Railways are divided into two basic categories: passenger transport services and freight transport services. Both the passenger and freight transport output can be divided into two components: tonne-kilometres into tonnes and average haul distance, and correspondingly passenger-kilometres into the number of passenger journeys and their average length. The statistical method used produces the relative weights by which these partial outputs can be aggregated when assessing total output and changes in productivity. The outputs are weighted by their estimated cost elasticities. These cost elasticities describe the percentage change that a one-percent change in output brings about in costs. (AI translation)
- ISSN: 0358-5980
- ISBN: 951-9282-46-7
