International Postal Update — April 2011

LABOR UNREST HITS POSTAL SECTOR

Tight budgets have prompted a renewed debate over whether public-sector workers — including postal workers — are paid too much. The New York Times cited data from the Bureau of Economic Analysis to show that public workers’ annual compensation, including benefits, outpaces private-sector employees’ compensation by $9,000, on average. Public-sector compensation per hour is also higher than in the private sector. Public unions defend their compensation by arguing that government workers tend to have more skills and education than their private-sector counterparts.

Postal workers in the United States have long enjoyed a substantial wage premium. According to Michael Schuyler, Senior Economist at the Institute for Research on the Economics of Taxation, postal workers make at least 30 percent more than comparable private-sector workers. Like all federal workers, postal employees are forbidden from striking.

Members of the American Postal Workers Union had been working for more than three months without a contract until the union and the Postal Service reached a tentative agreement on March 14. The contract provides more than 200,000 postal employees with a 3.5 percent raise between now and 2015. Cost-of-living adjustments would be waived in 2011, and 2012 COLAs would be deferred until 2013. Thousands of jobs currently being contracted out would also be insourced to union members. The House Oversight and Government Reform Committee will hold hearings in April to examine the contract, which Committee Chair Darrell Issa (R-Calif.) believes could worsen USPS’s financial condition.

Meanwhile, labor unrest is plaguing national postal operators around the world. For instance, the Canadian Union of Postal Workers and Canada Post must hammer out a new collective bargaining agreement by the end of April to avoid a strike or lockout. The union is also seeking to recruit people who work behind postal counters at third-party retail drug store chains. Canada Post vigorously opposes the CUPW’s drive to unionize these workers.

ROYAL MAIL BARELY AVOIDS STRIKE

On March 4, the United Kingdom’s Communication Worker’s Union authorized a strike, but the union and Royal Mail management now appear to have arrived at an agreement. Under the terms of the proposed deal — which must be approved by April 13 — staff will receive a 3.68 percent pay increase over the next two years as well as a cash payment of £1,000. Royal Mail has also promised not to close any branch offices.

Royal Mail may struggle to pay for this deal. In February, Royal Mail Managing Director Paula Vennells said, “The Crown Post Office network is losing £55 million a year.” The British government has said that Royal Mail will only be able to survive if it takes on a commercial partner. Many British leaders believe that the agency will crumble if the universal service obligation is not substantially reformed. Lawmakers are already considering a bill that would sell or float much of Royal Mail.

DO FOREIGN POSTS OFFER MODELS FOR REFORMING USPS?

A Government Accountability Office report issued in February highlighted several innovative business initiatives launched by foreign posts as models which could inform U.S. Postal Service efforts to modernize and seek new revenue sources. The report, mandated by Congress in 2006, described strategies including the “Swiss Post Box,” which allows registered customers to use secure identification and digital signatures to have physical mail received, scanned, and delivered electronically. “We want to change the way people think about the last mile — as no longer physical, but digital,” the report quoted a Swiss Post official as saying.

The GAO also noted Deutsche Post’s “Packstations.” This network of 2,500 fully automated, stand-alone lockers located in high-traffic public locations like train stations permits customers to send or receive packages. It also pointed to a labor relations policy adopted by Australia Post that allows it to implement structural change by redeploying employees to other areas of business and by retraining them for different jobs.

A report from the USPS Office of Inspector General offered Poste Italiane — Italy’s national post — as an another example to consider. The Italian government is now delivering government services through the post office, including certified email, electronic invoicing for government contractors, and electronic archiving of official government documents.