Paper given by Thomas Krag at the Velo-city conference in Barcelona, September 1997

Economic or Organizational Importance Means Political Power

The impact on economy and employment is a key element in political discussions on which sectors or activities that should be given priority.

Sectors with a big turnover in economic terms and with a big number of employees are regarded more important than sectors which do not have - or do not appear to have - the same amount of money or people involved.

Since societal awareness and economic turnover are closely related, big companies have an easier access to political influence than sectors consisting of a large number of small enterprises or even individuals. This inequality has been sought reduced through organizations speaking on behalf of a big number of enterprises or personal interests. Some such organizations have been quite successful in gaining influence, others have not, and in any case organizations must justify their relevance towards their members while big companies so to say inherently are organized and has no need to justify this organization.

This is also true for the transport sector.

Big companies and sectors with a big economic turnover - e.g. the car sector and the public transport sector - has had a considerable influence on traffic policy in most countries. The bicycle, being unorganised and cheap, has had much greater difficulties in being taken into account.

Bicycle Sales and Repair

The annual turnover in bicycle and moped shops in Denmark is DKK 1,706 million^[1]. Out of this amount DKK 341 million is VAT and the remainder DKK 1,365 million is turnover excl. VAT.

The annual sales of bicycles in Denmark is 3-400,000. The sales of mopeds is rather limited, about 11,000 in 1995^[2], estimated to account for not more than 10-15% of the total turnover. The annual turnover of bicycles and bicycle repair thus can be calculated to be DKK 1,2 million excl. VAT.

About 800 genuine bicycle retailers, e.g. shops selling bicycles and bicycle accessories and offering bicycle repair, are active in Denmark. Out of these retailers 600 are estimated to be of the type "husband and wife" and the remainder 200 larger^[2]. If there are in average 5 employees in the larger retailers one can calculate a total occupation of 2,200 persons in these retailers.

About 75% of the bikes sold in Denmark are sold through bicycle shops and the remainder in supermarkets and similar sort of shops. Bikes sold through these alternative channels are generally cheaper than the average bicycle sold and the major part of the turnover is "whole" bicycles and virtually no bicycle repair. The turnover is assessed to be DKK 180 million excl. VAT per year, relating to about 120 employees in the supermarkets.

Alternatively one can calculate a number of employees from the total turnover figure of DKK 1,200 million excl. VAT per year. Assuming that 35% of this figure is paying for labour in connection with bicycle repair and that the share of profit for the remainder 65% is 30% one will reach a figure for profit and repair work of DKK 654 million per year. Assuming that 25% of this is paying for rent and other costs and an average salary of DKK 200,000 per year one can calculate a total occupation of 2,450 persons, not so far from the figures mentioned above.

Bicycle Production

The three main bicycle factories in Denmark has in total 450 employees^[3]. The main Danish bicycle rack producer has 50 employees out of which the 25 are involved with the bicycle rack production and sales. To this should be added a number of smaller businesses and several wholesale dealers, of which a few are big businesses. A total of 750 is estimated to be working with production and wholesale in the bicycle sector.

Infrastructure and Maintenance

The state is spending DKK 40-50 million per year for the construction of bicycle tracks. Local and regional authorities are spending money for this purpose as well, but a precise figure is not known. A total figure, also including maintenance, of DKK 160 million per year has been suggested^[4]. A roughly estimate of the number of people employed by these activities is 200.

Bicycle Tourism

The number of bicycle tourists is growing. A cycle tourist is expected to spend DKK 350 per day, and bicycle tourists are estimated to have at least 1 million overnight stays per year, corresponding to a turnover in bicycle tourism of DKK 350 million per year (DKK 280 million excl. VAT). Alone the accommodation of these bicycle tourists is found to employ 735 persons^[5].

Overview of Turnover and Employment

1: A figure for the turnover and wholesale is not added as the amount (for the domestic part) is already contained in the sales and repair-figure.

Bicycle Economy is Small

These figures can be related to other figures in a number of ways. The turnover, thus, is 0.2 % of the Gross National Product. The number of persons employed is .14 % of the total number of the working population. Neither of these figures can said to be big.

An obvious comparison is the automobile sector. The annual turnover here is DKK 90-100,000 million excl. VAT and the number of persons employed or involved is 63,000^[6]. The figures count for sales, repair and gas-stations, e.g. tourism and infrastructure is not involved. Compared to the bicycle trade the automobile business thus has 80 times as much money and 20 times as many people involved. The relatively big turnover figure is explained by a high taxation (beyond VAT) of cars, a high share of import (there are no car factories in Denmark) and a somewhat higher income level for people involved in the automobile sector.

One can also compare to the number of trips or kilometers travelled. Walking and cycling account for 26% of all adults' trips and for 6% of all kilometers travelled. The same figures for the car is 66% and 75%^[7]. The car is thus not only in terms of costs but also in terms of labour associated with its' use more expensive to use. This is particularly true when trips are regarded but also the case when kilometers is used as a basis for comparison.

Savings Serve as a Better Argument

If one thus wants to prove the importance of the bicycle in traditional economic or employment terms the chance of success is limited. This is actually not so surprising, as the bicycle is known to be cheap and efficient. What might be seen as paradoxical is the fact that a given activity will be regarded of less economic importance the more efficient it can be done.

A consequence of this is however also that the bicycle will never reach a high importance in direct economic terms. The arguments for its' use has to be sought in other areas.

A few words should however be said about the employment effect. If a city or country would be so successful in its' attempts to change the travel patterns that the turnover in the automobile sector did fall, a predictable result would be a loss of jobs in this sector. This would of course, for the sector as such, be a problem, but since the turnover would move to other sectors (part of it presumably to the bicycle sector) and increase the number of jobs there, it should not, for the society as a whole, be regarded a problem.

If one wants to use economic arguments for using bicycles one should be estimating savings rather than costs associated with the bicycle. Savings from an increased use of bicycles can be expected in the transport sector by reduced area demands for roads and carparking, reduces environmental costs in terms of noise and pollution, reduced congestion costs. Savings can furthermore be expected in the health sector due to better fitness and reduced risk for a long list of "welfare-diseases". One of the best evaluations of this so far was published in 1993^[8].

References