POSTAL LIBERALISATION: THE ISSUES, THE IMPACT AND UNION RESPONSES

POSTAL LIBERALISATION: THE ISSUES, THE IMPACT AND UNION RESPONSES

Postal liberalisation: the issues, the impact and union responses A report from UNI Global Union

By Sarah Ryan With Contributions from Cornelia Broos October 2012

Acknowledgements

UNI Global Union would like to thank many unions for contributing the case studies that have informed this research project. In particular, we’d like to thank AATRAC, FOECYT and FOECOP from Argentina, GPF from Austria, CGSP from Belgium, CUPW from Canada, FENTECT from Brazil, ver.di from Germany, Hungarian Postal Trade Union, SLP CISL from Italy, JPGU from Japan, UPCW from Malazsia, FNPT UMT from Morocco, SNTPT from Senegal, Trinidad and Tobago Postal Workers Union, Communications and Transport Workers’ Union from Tanzania, CWU from South Africa, CWU from the UK, CWU from Ireland and Postkom from Norway.

Postal Liberalisation: The Issues, the Impact and Union Responses 1 Introduction This report will cover some of the important issues trade union members, activists and leaders need to understand about postal liberalisation. Trade unionists can be an important force in shaping the postal sector to maintain good postal jobs and quality, accessible universal postal service. Dramatic changes have been sweeping the postal sector in the past two decades that are transforming how mail is delivered, how, where and when citizens access postal services and what a postal workers’ job looks and feels like. Technology, decreasing mail volumes and environmental issues are combining with liberalisation to reshape the postal sector. The reality is that decreasing volumes in the context of postal liberalisation puts pressure on postal workers’ jobs and working conditions as well as on universal postal services. Unions need to confront the

Countries with fully liberalised postal markets:

●● Argentina ●● Finland ●● Lithuania* ●● Singapore

●● Austria ●● France ●● Luxembourg* ●● Slovakia*

●● Bahrain ●● Gabon ●● Malta* ●● Slovenia

●● Belgium ●● Germany ●● Netherlands ●● Spain

●● Bulgaria ●● Greece* ●● New Zealand ●● Sweden

●● Colombia ●● Hungary* ●● Nicaragua - ●● Togo abolished ●● Cyprus* ●● Iceland in 1995 ●● United Kingdom

●● Czech Republic* ●● Ireland ●● Peru *These countries have an extended deadline ●● Democratic ●● Italy ●● Philippines to liberalise their postal Republic of markets in accordance the Congo ●● Japan ●● Poland* with the Postal Directive 2008/6/EC ●● Denmark ●● Kyrgyzstan ●● Portugal

●● Ecuador ●● Latvia* ●● Romania*

●● Estonia ●● Liechtenstein ●● Russian Federation

2 UNI Global Union Partial postal liberalisation is when the reserved area, that is the products that can only be delivered by the designated operator, is decreased.

Full postal liberalisation occurs when the reserved area, or monopoly, is entirely eliminated. This means that private companies can compete to provide services in the entire postal market.

changes in the industry and work to ensure good quality jobs and services can be maintained.

There have been some major developments in terms of postal liberalisation in the past few years, particularly with the implementation of European Commission Postal Directive 2008/6. Sixteen European Union member countries have already liberalised their postal markets with another 11 set to liberalise by January 1, 2013. This has greatly increased the number of countries with liberalised postal markets (see list on page 2). Many of these cases give us concrete examples of how to minimise the impact of liberalisation on working conditions and postal services.

This report will explore key aspects of postal liberalisation, its impact on services and employment as well as effective practices postal unions can employ to either prevent postal liberalisation or minimise its negative impacts. The first chapter looks at the current state of postal liberalisation including the enforcement of the monopoly, the origins of postal liberalisation, the connection with corporatisation, commercialisation and privatisation, the universal service obligation and regulation. The second chapter will explore the status of competition in liberalised postal markets, the impact on wages and working conditions and changes in service quality and prices. The final chapter will provide some best practices of unions responding to these challenges including union campaigns to prevent postal liberalisation, postal laws that protect good jobs and services and innovation as a safeguard against service and job cutbacks.

Postal Liberalisation: The Issues, the Impact and Union Responses 3 Section I –­ Postal liberalisation: the issues

Introduction

This section provides an overview of the postal market related to postal liberalisation. It will explain what postal liberalisation looks like, where it came from, how it affects the structure of companies, the impact on universal postal service and how liberalisation is being regulated. This chapter describes some of the essential concepts to understand postal liberalisation. It also covers some of the broad trends and changes occurring related to the monopoly, universal service, the structure of postal operators and regulation. Some key issues that will be explored include the:

●● Enforcement of the monopoly, especially regarding liberalisation in law versus liberalisation in practice;

●● Origins of postal liberalisation such as economic crisis or trade agreements;

●● Link between liberalisation, corporatisation and privatisation;

●● Challenges and debates about the universal service obligation;

●● Debates on regulation, particularly about licensing and access to the postal network.

Enforcement of the postal monopoly

In broad terms, you can divide examples of postal liberalisation into those that Why a postal monopoly? are legally mandated and those that exist de facto. A postal monopoly or reserved area has been the In Europe, New Zealand, traditional mechanism for funding universal postal Argentina and Japan, postal service. It means that a designated postal operator, liberalisation has been legally which is responsible for providing universal postal mandated. In cases of de service, is the only company that can sort, transport facto liberalisation, the market and/or deliver certain products. This is supposed to is liberalised in practice cover the cost of providing universal postal service. though legally there is still a The size of the postal monopoly varies from country reserved area. to country. In many countries in Africa and Latin In many developing countries, America, the monopoly covers letters under 2 kg and though a postal monopoly parcels under 1 kg. While in Canada and Senegal, the exists in law, competition monopoly covers letters that do not exceed 500g. 1 exists in fact. In Latin There has been a trend in recent years to either America, competition exists eliminate or reduce the monopoly through partial or in Mexico, Chile, Peru, full postal liberalisation. Bolivia and Paraguay though a monopoly exists in law.2

1. Guislain, Pierre. The Postal Sector in Developing and Transition Countries: Contributions to a Reform Agenda. The World Bank, 2004, p. 20 2. Maron, M. Luppo, L. Alacopp, (2012, August 29). Personal interview.

4 UNI Global Union In Trinidad and Tobago, the Operations Manager of the post office was not sure if the postal monopoly was still in effect given that it had an expiration date in the law.3 It is still in effect according to the regulator, though clearly it is not enforced. The regulator believes that remailing is taking place in cities, which contravenes the monopoly.4 The same situation applies with illegal competition occurring in sub-Saharan Africa.5 “In many countries [in Africa], the utility companies deliver their own bills and there’s a lot of unauthorised competition from small-scale operators and bus companies.”6 This illustrates a larger problem that many postal operators, especially in developing countries, lack mechanisms to enforce their postal monopoly.

In some cases, postal companies operating illegally in the reserved area have been penalised. For example, the Romanian postal regulator applied a € 11,000 fine to Total Post for having

International remailing in Canada International remailing involves collecting lettermail and bringing it to other countries where it is processed and remailed to other countries. In some cases, this violates the exclusive privilege of the designated operator.

In Canada, mailing companies were illegally participating in the international mail business. Canada Post initiated court action against several of these remailers. The courts confirmed that this violated Canada Post’s exclusive privilege or monopoly.

During the 2006 election, the Canadian International Mail Association (CIMA) demanded a parliamentary review of the exclusive privilege provisions of the Canada Post Corporation Act. In 2010, the government passed a law removing international letters from Canada Post’s exclusive privilege to handle letters. Now international remailers legally participate and compete with Canada Post for this business.

CUPW Case study, 2012 delivered mail covered under the reserved area. In fact in 2011-2012, the Romanian regulator had given seven fines to operators delivering reserved area mail.7 Furthermore, the Brazilian post has taken several companies to court when they believe the monopoly has been violated.8

The origins of postal liberalisation

Postal liberalisation is linked to broader global trends associated with neoliberalism. This is a set of policies that encourages privatising state owned enterprises, reducing regulations on the market and opening sectors of the economy up to competition. It is often advocated by neoliberal think tanks and private companies that want to provide services covered by the monopoly. More concretely, postal liberalisation is often linked to economic crisis, World Bank reform projects, or trade agreements.

3. Hernandez, R. Trinidad & Tobago Post (2012, September 6). Personal interview. 4. Roach, K. Ministry of Public Utilities, (2012, September 7). Personal interview. 5. Jose Anson, Joelle Toledano, Laia Bosch, and Justin Caron. Postal Economics in Developing Countries: Posts, Infrastructure of the 21st Century?. Bern: Universal Postal Union, 2008. p. 39 6. Lee, Graeme. ‘Universal Service in Africa’. Postal Technology International, n.d. 7. Romania Business Insider. Romanian Total Post gets second fine for breaching exclusivity of state-owned Romanian Post. June 1, 2012. www.romania-insider.com 8. Mello Mattos, A., Barbosa Junior, V. (2012, September 3). Personal interview.

Postal Liberalisation: The Issues, the Impact and Union Responses 5 Economic crisis: In New Zealand and Argentina, economic crisis was one of the drivers of postal liberalisation. In Argentina, the Menem government adopted a vast program of privatisation and deregulation in the majority of economic activities during the early 1990s. This happened during a time of economic crisis with living costs rising at 200 percent per month. The situation was similar in New Zealand in 1984 with a new labour government coming into power in the midst of a serious currency crisis. Postal liberalisation was part of a broader state, social and economic reform program based on neoliberal theory.9

World Bank reform projects: The World Bank has carried out more than 47 postal reform projects. Originally, they took the approach that reform should reflect local circumstances. However, more recently they have adopted a neoliberal approach to the postal sector. Their recent publications call for replacing a Universal Service Obligation that is funded by a monopoly with a deregulated market with significant private participation.10

Trade agreements: In negotiations of bilateral, multilateral or worldwide trade agreements, governments can agree to open Find out! the postal sector to competition. As part of the negotiations for the General Agreement on Trade and Services (GATS), 12 Find out if your country countries have made commitments regarding competition in the has made any GATS postal sector. However, many countries placed limitations on commitments on postal commitments by excluding delivery of certain items, particularly liberalisation! those covered by a monopoly.11 1. Visit tsdb.wto.org/ Unions are also concerned about several multilateral or default.aspx bilateral trade negotiations. There are concerns the Trans- Pacific Partnership will force the liberalisation of some sections 2. Go to Jump to a of Japan Post’s operations. “If Japan hopes to join the TPP, specific sector for a it will have to demonstrate that it welcomes competition in all given Member sectors of its economy on a level playing field, including with its 3. Select 02.A. Postal state-supported enterprises,” said Bob Vastine, the President Services of the U.S. Coalition of Service Industries.12 The Canadian Union of Postal Workers is also concerned the ongoing 4. Select your country Canada-EU trade negotiations will involve a commitment to liberalise the country’s postal market.13 There is also unease 5. Press go! about postal liberalisation being considered in the trade negotiations between the EU and Caricom, an organisation of 15 Caribbean nations.

In Brazil, private companies launched a lawsuit to reduce or eliminate the postal monopoly. The case focused on the definition of a letter under the postal legislation. The result was a 5-4 decision in favour of keeping the current definition.14 In the European Union, the rationale for liberalisation was to have one postal market throughout the territory, involving harmonised regulations and the same performance standards. In all cases, there was the idea that postal liberalisation would make mail delivery more efficient and resolve any significant problems that existed in the sector.

9. Kenny, A., Beyond the Propaganda, Postal Deregulation in New Zealand, EPMU, Wellington, 2006, p. 2. 10. Sauber, J. The Changing Role of the World Bank in the Postal Sector. 11. The countries that have agreed include: Albania, Djibouti, FYR Macedonia, Gambia, Israel, Krygyz Republic, Moldova, Mongolia, Senegal, Tonga, Turkey and Ukraine. World Trade Organization, Postal and Courier Services: Background Note by the Secretariat. S/C/@/319. August 2010. 12. Hongo, J. Postal privatisation comes off back burner. The Japan Times. April 13, 2012. www.japantimes.co.jp/text/nb20120413a2.html 13. CUPW. Letter to Steve Verheul, Chief Negotiator (CETA) - Re: Canada-EU Comprehensive Economic and Trade Agreement (CETA) Negotiations, February 23, 2010. http://www.cupw.ca/1/2/1/5/2/index1.shtml 14. Mello Mattos, A., Barbosa Junior, V. (2012, September 3). Personal interview.

6 UNI Global Union Liberalisation and privatisation

There has been a broad shift toward greater corporatisation of postal operators in the past few decades. In some cases, postal operators have been either partially or fully privatised. This shift puts pressure on companies to prioritise profits and economic sustainability over quality postal services or wages and working conditions. At the same time, some unions have advocated for greater corporatisation to remove the government and political influence from the day-to-day operations of the post office.

Definitions The are several steps in increasingly corporate or private ownership and structure. Here’s an explanation of the key terms.

Commercialisation: Although the postal operator is not transformed into a private company, it is given more autonomy and made accountable for its decisions and overall performance.

Corporatisation: A postal operator is given the legal status of a private company, although the government still retains full ownership.

Privatisation: The ownership of the post office is transferred partially or entirely from the public to the private sector. In some cases, the government still owns a majority of shares while in others, the government owns a minority of shares or none at all.

Management Contract: This is when a private company manages the post office on contract for a period of time subject to conditions and standards laid out by the government. This doesn’t affect the ultimate ownership of the company.

The incumbent postal operator is usually subjected to greater corporatisation, commercialisation or privatisation prior to liberalisation of the postal market. The intention is to create a more efficient governance structure for the postal operator, particularly when it will have to compete with private operators in a liberalised market. In the majority of European countries, the post office has moved from being a state-owned company to a private or public liability or stock-company legal form.15 The post office has only been partially or completely privatised in a few cases (See table on page 8). There are attempts to privatise the postal operator in several countries in Europe right now including the UK and Portugal. The Romanian Post also just hired KPMG, a consultancy firm, to advise on the privatisation of their post office. It is likely there will be further attempts at postal privatisation given the current economic crisis in Europe.

In the European Union, the postal operator remains a government department or traditional state-owned enterprise in only a few cases. The Czech Republic post office is still a state-owned enterprise.16 In Cyprus, the post office is a government department, however, the company states they are “intensifying the consultation with the trade unions with regard to the transformation of Cyprus Post to a Public Organisation with financial and administrative autonomy...”.17

In Japan, there has been a series of reorganizations of the postal operator in the last 10 years. In April 2001, the postal operator was transformed from a government department to the Japan Postal Agency, which was an external body of the General Affairs Ministry. Next, to coincide with the postal liberalization implemented in April 2003, Japan Postal Agency was transformed into

15. Okholm, H.B, Winiarczyk, M., Möller, A. Main developments in the postal sector, (2008-2010). Copenhagen Economics. 29 November 2010, p. 31 16. Okholm, H.B, Winiarczyk, M., Möller, A. Main developments in the postal sector, (2008-2010). Copenhagen Economics. 29 November 2010, p. 31 17. Cyprus Postal Services. www.mcw.gov.cy/mcw/dps/dps.nsf/activities_en/activities_en?OpenDocument#. Accessed October 22, 2012.

Postal Liberalisation: The Issues, the Impact and Union Responses 7 Japan Postal Public Corporation, which is fully owned by the Japanese government. Then, in October 2007, Japan Postal Public Corporation was broken into five companies under a holding company. New legislation passed in 2012 merges two of the five companies - the post office and mail delivery divisions. The separation of retail and mail delivery businesses was believed to improve business efficiency by making clear the cost structures of the old mail service. However, the corporate breakup exposed many problems, especially regarding customer services, and crisis management.

Countries that have either partially or fully privatised the postal operator

Country State ownership

Austria 52.83%

Belgium 50% +1share

Singapore 26.01%**

Germany 25.5% *

Lebanon 0%

Malta 0%

Netherlands 0%

Malaysia 0%

* This is held through the KfW, a German government-owned development bank. The share decreased from 30.5% in September 2012.

** This is held through Temasek Holdings (Private) Limited, an investment company owned by the government

Privatisation can affect worker’s compensation and quality postal service because emphasis is placed on making profits for shareholders. InAustria , the union GPF argues: “The consequences of the privatisation were the closure of post offices a separation of the post into divisions and the creation of a board and a supervisory board. Since the change only profit and the interests of the shareholder count.”18

Some postal operators have also been operated through a management contract. This model also tends to emphasize corporate performance and profit in the operation of a company. New Zealand Post International won a bid in 1999 to manage the post office in Trinidad and Tobago for five years and Argentina’s post office was managed by a private consortium from 1997 to 2003. The Guatemalan postal service was also operated on a management contract for five years. In the case of Argentina and Guatemala, the contracts were viewed by unions as a failure. In Guatemala, union leaders were dismissed and the workforce dramatically downsized while in Argentina, mail volumes through the official post decreased dramatically, many jobs were cut and many post offices in rural areas were closed down.19

18. GPF Case Study, 2012 [Translation] 19. Sauber, J. The Changing Role of the World Bank in the Postal Sector. Presentation to Foro Postal Europa-America, Madrid, 6-8 May, 2002

8 UNI Global Union The struggle against privatisation Many unions have been struggling against the privatisation of their postal service. The FNPT- UMT in Morocco undertook a major campaign to stop the privatisation of their post office in 2008-2009. They worked with politicians, academics and their members to develop a front against the proposed changes and successfully stopped a draft law from being approved.20 The SNTPT in Senegal successfully fought the privatisation of the postal operator’s subsidiaries from 2000 to 2004.21

The CWU UK has fought attempts by the government to privatise Royal Mail several times. A Green Paper on Postal Reform was introduced in May 1994, which outlined various options for privatisation. The CWU vigorously opposed this and it was dropped. The CWU fought another attempt in 2009 but following a change of government, legislation was passed in 2011 permitting the private sale of Royal Mail. The Government’s stated intention is for the sale to take place in the 2013-2014, although there have been few reported developments.22 The SNTCT in Portugal has been conducting a campaign to stop the privatisation of their post office during the past few years. The CWU in South Africa has also been active against the government’s future plans to privatize their post office.23

At the same time, some commentators have remarked that it has become more difficult to privatise postal companies given the declining mail volumes in the sector and the economic crisis. Frank Appel, CEO of Deutsche Post DHL, which was privatised while mail was still making significant profits, stated at a recent conference: “I can’t see how you can privatise the postal operator now. Why would you invest in a postal operator without a clear growth strategy? It is a huge challenge in my view because how do you explain that this is a good investment going forward?”24

Liberalisation and the universal service obligation

There have been some shifts regarding the universal service obligation (USO) linked to postal liberalisation. Researchers What does European and consultants are increasingly discussing reductions of the USO to reflect drops in mail volumes and minimise the potential postal law say? costs to be reimbursed to the universal service provider in “The universal service 25 the context of postal liberalisation. Furthermore, it is not guarantees, in principle, necessarily still the traditional post office which will provide one clearance and one the universal service. delivery to the home or premises of every Reducing the scope of “postal” services: natural or legal person a historic perspective every working day, even in remote or sparsely There have been many debates about the scope of postal populated areas.” services. At the beginning of the liberalisation era, “postal” services were restricted to the exchange of letters and goods. S. 21 DIRECTIVE 2008/6/EC Whereas historically, post offices offered more extensive services including government services, government payments,

20. FNPT Case Study, 2009 21. SNTPT Case Study, 2012 22. CWU UK Case Study, 2012. For more information on the CWU UK’s campaign against the privatisation of Royal Mail, see www.cwu.org/news/archive/cwu-continue-campaign-to-keep-the-post-public.html 23. CWU South Africa Case Study, 2012. 24. Post & Parcel. Deutsche Post chief: Royal Mail will be difficult to privatise. 22 May, 2012. 25. C. Borsenberger, D. Joram, C. Magre, B. Roy (2010), “Cross-country comparison of optimal mail delivery frequencies” in Heightening Competition in the Postal and Delivery Sector, edited by M. A. Crew and P. R. Kleindorfer, 2010; E. S. Pearsall and C. L. Trozzo “Evaluating the demand effects of reductions in the frequency of delivery service”, in Reiventing the postal sector in an electronic age, edited by M. A. Crew and P. R. Kleindorfer, 2011.

Postal Liberalisation: The Issues, the Impact and Union Responses 9 savings, and integrated billing services. Under the pressure of the Washington consensus to promote neoliberal policies, the various multilateral agreements that dealt with these services were abolished in 1969. Agreements on the collection of bills, international savings, subscription to newspapers and periodicals were all terminated. Postal financial services were more or less reduced to money orders.26

Subsequently, the EU developed the single market in postal services involving competition and universal service. It considers universal postal services to include letters and parcels although states are free to have other public services offered through the postal network. The whole of north and south America, and “Anglo-Saxon” industrialised countries only consider letters and sometimes money orders as part of the basic postal services. However, the rest of the world: Asia, Africa, continental Europe, Russia and satellite states have considered postal services as a broader array of services including payments, government payments and services, savings and/or transaction accounts and in some countries like India and Japan, life insurance.27

Reducing the scope of postal services: a current perspective The current discussions about reducing the scope of the USO have focused on reducing the number of deliveries per week, longer transit times, removing certain products from the USO or reducing the geographical coverage requirements.28

Copenhagen Economics, one of the major postal consultancy firms argues, “The USO should rely on a cost benefit approach. The USO should only include services which are important to consumers and that are not unduly costly to provide.”29 Alacopp, an organisation representing 12,000 private postal companies in Latin America, argues that the USO should only include basic services that cannot be replaced through alternate means and that contribute to social inclusion. They also suggest that in some areas of a country, reducing the delivery frequency to three times per week could be adequate.30

A whole series of research papers have evaluated the purpose and mechanics of reducing the USO. One recent research paper evaluates the possibility of uniting a postal and telecommunications USO involving a reduction of the postal USO and expansion of that of the telecommunications obligation.31 Another paper evaluates the cost of including banking services in the USO and proposes using alternate, less costly mechanisms to provide this service.32 A further paper develops an econometric model measuring the cost savings by reducing the frequency of delivery and/or reducing geographic coverage of delivery.33

To date, there have not been many recent attempts to reduce the USO in liberalised postal markets. In Sweden and Norway, there have been limited reductions of the USO.

Cash services were removed from the Swedish USO in 200334 and Norway just removed these services from post offices in 2012 except for mobile post offices.35 However, it’s clear there are strong advocates for reducing the scope of the USO, especially in a liberalised market with declining volumes.

26. Pilley, M.O. (2012, 24 October). Personal communication. 27. Pilley, M.O. (2012, 24 October). Personal communication. 28. Okholm, H.B, Winiarczyk, M., Möller, A. Main developments in the postal sector, (2008-2010). Copenhagen Economics. 29 November, 2010 29. Okholm, H.B., Winiarczyk, M. What is the future of the USO? Mail & Express Review. March 2011. 30. ALACOPP, Regional Perspective on the Universal Postal Service: The importance of the universal postal service from the perspective of private operators in Latin America. 5 November 2009. UPU Council of Administration Committee 1. 31. Haller, A., Jaag, C., Trinkner, U. Defining and financing an intermodal USO. Paper for 20th Conference on Postal and Delivery Economics, 2012, Brighton. Swiss Economics, 2012. 32. Okholm, H.B., Möller, A. Changes in demand – the cost of not adapting the USO. Paper for 20th Conference on Postal and Delivery Economics, 2012, Brighton. Copenhagen Economics, 2012. 33. Cuomo, M., Nardone, T., Rovero, A., Scarfiglieri, G., Electronic substitution and USO scope definition. Paper for 20th Conference on Postal and Delivery Economics, 2012, Brighton. Poste Italiane, 2012. 34. Trade Unions preparing for change in the Postal Industry. Report from Bucharest meeting for EC Project. 2012 35. Saetre, I. (2012 , 31 May). Personal communication.

10 UNI Global Union Funding the universal service A part of the debate on postal liberalisation is how to fund the USO without a reserved area. Existing models include financing through a universal services fund, direct government subsidy, access charge, revenue tax, profit tax or lump-sum tax. According to the European Directive, countries can fund the USO net costs through two options: compensating USO providers from public funds or sharing the net cost of the USO between service providers in a compensation fund. At the same time, the regulations for how compensation can be accessed are different from country to country. In fact, there are few examples of a compensation fund existing in practice.

Under the postal law in Germany, if a company can prove that the USO leads to economic disadvantages, then a compensation mechanism comes into force. Companies with a license and revenue of more than € 500,000 per year would be obliged to pay into the fund. However, this fund has never been implemented and there are some constitutional concerns regarding its’ implementation related to interference with property rights.

In Hungary, which is set to liberalise its postal market in 2013, the new postal law specifies that if the net costs of funding universal service are greater than zero, this is deemed to constitute an undue burden on the universal service provider. The regulatory authority determines the amount of the undue burden. These costs would be covered by a universal services fund financed by the contributions of licensed service providers. The contributions of these service providers would be in proportion to their market share. A cap to contributions would be established by the government, with anything above being covered by the state.36

PostNL in the Netherlands is applying to the regulator for USO net cost compensation due to decreasing mail volumes.37 In the UK, the universal service obligation is financed entirely by Royal Mail from revenues derived from universal and non-universal service products. The regulator can make competitors providing services within the scope of the USO contribute to a universal services fund. However, this has never been implemented. The previous regulator, Postcomm, would not consider funding the costs of universal service delivery through external mechanisms because of the risk of inefficiency in Royal Mail. Ofcom, the current UK regulator, intends to publish guidance by 2013 on whether they may initiate a compensation fund in the future to respond to increasing levels of end-to-end competition.38

In some cases, the respective government has not put in place a mechanism for funding the universal service obligation. For example, in Argentina, the universal service provider is obliged to cover all USO costs in the liberalised postal market. There is a small 5000 Argentine Pesos (1,067 USD) yearly license fee private operators must pay regardless of the size of the company. Recently, the post office has been able to make a profit regardless of the USO costs because mail volumes have grown due to high GDP growth. However, the company expects a leveling or reduction of volumes in the near future and 70 percent of post offices are not able to cover their costs, which will put increasing strain on the company.39 The unions and the company are advocating for a funding mechanism to cover USO costs either through a higher yearly cannon fee based on the size of the private operator or a reserved area to be re-instituted for all mail sent by the government.40

The introduction of postal liberalisation creates serious tension around funding the USO, especially in a postal environment with declining mail volumes. Copenhagen Economics argues, “A compensation mechanism will create a natural incentive for the contributors to argue about the scope of the USO.”41 This debate has already started taking place as we can see above.

36. Hungarian Postal Trade Union case study, 2012. 37. CEP Research, PostNL wants USO net cost compensation due to decreasing mail volumes. 4 July, 2012. 38. CWU UK case study, 2012 39. Tristan, J.C. (2012, August 28). Personal interview. 40. FOCYT, FOECOP, AATRAC, Correo Argentina, (2012, August 27-29). Personal interviews. 41. Okholm, H.B, Winiarczyk, M., Möller, A. Main developments in the postal sector, (2008-2010). Copenhagen Economics. 29 November, 2010

Postal Liberalisation: The Issues, the Impact and Union Responses 11 Identifying the universal service provider Traditionally, the official post office was the automatic provider of the USO. However, with liberalisation, many countries have instituted a framework in which multiple companies who meet the USO requirements can bid on the contract.

The Austrian Post is the universal service provider for five years, after which the government will evaluate whether other companies meet the requirements. In Belgium, the universal service provision is by bpost for eight years as of 1 January 2011. In Germany, the postal law foresees a situation in which the USO can’t be provided adequately and the regulator can oblige licensed companies to provide this service.

While in Singapore, there are two kinds of postal licenses. One of which, the Public Postal Licenses, is for the provision of a service that complies with the USO, including provision of island- wide letter collection and delivery and maintaining a minimum number of post boxes and post offices. Currently, the only licensee with this type of license is Singapore Post with a license term of 15 years.

Therefore, the new postal framework in liberalised countries foresees the possibility that a private operator provides the universal service rather than the traditional postal operator. In some cases, it also opens the door to having several operators providing the universal service.

The importance of universal service Despite the attempts to limit the scope of the universal service, there has been some counter movement to maintain and even strengthen universal services. The last two Universal Postal Union congresses modernised postal payment services and reintroduced cash-on-delivery. In fact, some countries include transaction or savings accounts under their universal service obligations. At the 2012 Doha UPU Congress, a resolution was adopted on basic postal accounts. Furthermore, many countries in northern Europe, Latin America, the south of Africa, Turkey and Asia are reinforcing the idea of postal services being physical, electronic and financial. In many African countries, digital inclusion policies are part of the universal service obligation, most often meaning that rural posts are Internet Communication Technology (ICT) access points. Expedited Mail Service is also considered as part of the universal service in an increasing number of cases.

Some governments have recognised the valuable role of postal services in their countries’ economic and social development. The Brazilian government increased the scope of their USO in 2012 in terms of geographic coverage and delivery to non-registered addresses (See more on page 38). Furthermore, in South Africa, the USO involves the rollout of post boxes for communities, provision of addresses for households and ensuring that communities are connected through means that are accessible and affordable. A recent ICT policy discussion paper put out by the ruling ANC, specifies that: “The National Address system should prioritise the rollout of addresses to informal settlements and rural areas to ensure the addressability for all households to achieve economic inclusion”. The post office has also been opening semi-outlets where it is not possible to have full-outlets in rural areas to ensure accessible postal services.

Postal regulation under liberalisation

With the opening of postal markets, most countries have introduced regulatory structures to oversee the competitors in the sector. Traditionally the post office was monitored by a government department. With liberalisation, the norm is to have an independent regulator to deal with issues such as licensing, quality, pricing, access, and fair competition. In fact, many countries in the African Union have set up independent regulators to oversee the postal market regardless of whether liberalisation of the market has occurred.42 One of the key issues being debated now is whether or how competitors can access the traditional operator’s network.

42. Pilley, M.O. (2012, 24 October). Personal communication.

12 UNI Global Union Licensing Most liberalised postal markets require all operators in the Social regulation market to be licensed by the regulator. However, there is Be sure to check out variation between countries about the conditions necessary recommendations to operate with some even including social requirements. for social regulation Originally, there were few requirements for licensing in in liberalised postal markets! Argentina other than a 5000 Argentine Pesos yearly 43 cannon. Revisions in 1997 and 2005 have resulted in You can find them here: stronger requirements. Now, companies have to register http://goo.gl/umCvc with the regulator, pay required taxes, pension and social obligations, as well as indicate their geographic coverage UNI Europa Post & area and quality standards and pay the yearly cannon. Logistics produced these tips to help In the German postal law, a social clause exists but has maintain good jobs for never been invoked by the regulatory authority. The social postal workers and the clause states that the regulator should refuse a license if the continuation of quality employees are not treated equally in terms of essential working universal postal service 44 conditions as those employed by Deutsche Post DHL. in a liberalised market. Essential working conditions are considered salaries, working time and duration and holidays.45

The draft postal law in Hungary also contains labour provisions. If the operator who is applying for a license does not satisfy labour requirements or is shown to be in breach of labour relations provisions, the regulatory authority may reject the application. In Belgium, there are strict licensing requirements for companies wishing to operate in the postal market. Companies need to cover the three regions of the country with 10 percent the first year leading up to 80 percent in the fifth year. Furthermore, companies must deliver mail two times per week after two years of operation and be equipped to return non-deliverable mail.

In Japan, two types of private postal operations may be licensed. The first one for General Correspondence Delivery Service applies to mail items weighing 250 g or less that should be delivered within 3 days. The entry conditions are: (1) nationwide delivery services; (2) placing approximately 100,000 collection boxes across the nation; (3) delivering mail items six days a week and more. The second type of license is for Special Correspondence Delivery Service, which provides high value added service. This service shall deliver: (1); dimensions totaling more than 90 cm or weight over 4 kg; (2) to be delivered within three hours of being mailed; (3) to be charged 1,000 yen or over. The heavy licensing conditions for General Correspondence Delivery Service means that no private operators have been registered to compete with Japan Post in this segment.46

In Togo, where the postal market is fully liberalised, the Universal Postal Union Integrated Postal Development Plan in 2008 commented that liberalisation had gone too far: “Authorisations are granted to private operators (seven) without sufficient due diligence especially as regards ethical standards of management and without any guarantee of the business economic sustainability and public service continuity”. New postal legislation has been in the making since this diagnosis was made in 2008.47

43. Azpiazu, D., Basualdo, F., Manzanelli, P., What has postal liberalisation delivered? The case of Argentina. August 2009. 44. § 6 Abs. 3 Satz 1 Nr. 3 45. ver.di case study, 2012 46. JPGU case study, 2012 47. UPU. Integrated Postal Development Plan, 2008.

Postal Liberalisation: The Issues, the Impact and Union Responses 13 Therefore, there are significant differences between countries on the licensing conditions necessary to operate in the sector. In certain cases, like Japan and Belgium, there are strict conditions on geographic coverage and infrastructure necessary to enter the market. While in other countries like Argentina and Germany, it is relatively easy to get a license, especially given that the German regulator has not enforced the social clause regarding essential working conditions.

Access to the postal network There is currently extensive debate about whether or how competitors should be able to access the traditional postal Downstream operators’ physical network. There are examples of extensive access access requirements as was the case in the UK and those with no access for competitors as is found in Japan. Downstream access means that mail has The case of the regulatory regime in the UK illustrates the been collected and impact regulation can have on the universal service provider sorted by a competitor, and jobs. Postcomm, the UK postal regulator, insisted but is handed over mandatory downstream access to Royal Mail’s network was to the national postal required for effective competition. The regulator also used operator for final its powers to affect the price agreed between Royal Mail processing and delivery. and competitors for this access, rejecting arguments for pricing to accurately reflect the costs of these deliveries. The regulator’s concerns over the possibility of margin squeeze also led them to impose an access headroom regime, which maintains a fixed margin between Royal Mail’s retail prices and what it can charge competitors to access its network.

Mandatory downstream access under the terms imposed by Postcomm resulted in vast loss of business for Royal Mail. In itself this contributed to major losses for the company, but the pricing and headroom regime compounded the impact. Royal Mail effectively subsidised competitors activities by being forced to provide final mile delivery at a loss, while unable to set competitive prices to retain bulk mail contracts.48

In Japan, private postal operators have to create their own network as a prerequisite for being licensed in the General Correspondence Delivery Service segment.49 While New Zealand Post must provide competitors with ‘access to its network on terms and conditions no less favourable than those offered to equivalent customers’. Competitors can provide nationwide service through New Zealand Post’s network.50

UNI Europa Post & Logistics’ position is that access as envisioned by the European Regulators Group for Postal Services aims to create competition artificially by forcing incumbents to open up their networks. Furthermore, it should be up to democratically elected politicians, rather than the national regulatory authority, to decide how they want to open the network and with which prices and conditions. Furthermore, access must be linked with working conditions. In the case of operators not respecting working conditions or setting low prices that do not reflect the long-term incremental costs, the regulators should have the obligation and the power to remove the access allowance or to adjust rebates and discounts to a realistic cost level.51

48. Jacottet, N., Baldwin, J., Fitzpatrick, S., de Lange, E. Regulatory failure – the UK experience. Paper for 20th Conference on Postal and Delivery Economics, 2012, Brighton. Copenhagen Economics, 2012. 49. JPGU case study, 2012 50. Kenny, A., Beyond the Propaganda, Postal Deregulation in New Zealand, EPMU, Wellington, 2006 51. Saetre, I., DeMatteo, S. Contribution of UNI Europa Post & Logistics to the public consultation of the ERGP Report on “access” to the postal network and elements of postal infrastructure.10 September, 2012

14 UNI Global Union Conclusion Many changes are occurring in the post related to services, regulation, competition, and mail volumes. This section provided an overview of the current state of postal services in the context of liberalisation. It discussed the reality that in many countries where liberalisation has not been legally mandated, it exists in fact because the monopoly is not enforced.

Postal liberalisation is intricately tied to a set of neoliberal theories developed as part of the Washington Consensus. More specifically, economic crisis, World Bank structural adjustment programs, and trade agreements are linked to the liberalisation agenda. The changing structure of post offices has also been explored, with increasing numbers of post offices commercialising or corporatising and in a few rare cases, privatising.

This section also explored the pressure on postal operators to reduce the scope of the universal service obligation in the context of liberalisation and how operators other than the national operator will in many cases be able to provide the USO in the future. All of this is governed by regulation, which can help guide the operation of the postal market or make it difficult for the national operate to maintain its financial viability.

Postal Liberalisation: The Issues, the Impact and Union Responses 15 Section II – Postal liberalisation: the impact Introduction This section will focus on the impact of postal liberalisation on workers and quality universal postal service. Liberalisation puts increased pressure on postal operators to minimise costs and maximise profits in order to compete with other companies. This can affect working conditions, postal infrastructure and postage prices. The specific topics that will be examined in this chapter include:

●● The status and level of competition in liberalised postal markets;

●● Wages and working conditions in incumbent companies and in new competitors;

●● Changes in service quality such as post office closures or delivery standards; and

●● Changes in postage prices.

It is difficult to isolate the impact of liberalisation from other changes in the postal sector, especially declining mail volumes and technological change. However, it is clear there is a link between liberalisation and decreasing wages and lower working conditions. This is often accompanied by reductions in service.

Status of competition

The level of competition in liberalised postal markets varies greatly. In many Latin American countries, private operators hold the majority of the postal market share. While in Europe generally, competitors have failed to gain a strong foothold.

Competition is a major force in the Latin American postal market with public postal operators often having a small share of the overall market. “Market share of the public postal operators ranges from 15% to a high of 95% in Brazil. On average the share is about 25% in Latin American countries excluding Brazil. It’s usually more than 70% in other non-Latin American middle-income countries”52 In some cases, this competition is allowed under the postal law while in others, it exists because the monopoly is not enforced.

In Argentina, the official post office saw a significant decline in market share following postal liberalisation. The post office had 38.85 percent and private operators 61.15 percent of the market share in 2010.53 The post office’s market share was down from 71 percent in 1993, the year the postal market was liberalised. Market share dipped down to a low of 33.5 percent while the post office was managed by the CASA consortium.54 There are currently 119 private companies registered with the regulator.55 This is down from a high of 300 in 1997, several years after the postal market opened to competition.56 Seventeen of the private operators make 80.14 percent of the sales in the market57 so there are clearly large private operators that dominate segments of the market. In Argentina, postal liberalisation led to a dramatic loss of postal market share for the traditional operator.

52. Anson, Jose, Rudy Cuadra, Altamir Linhares, Guillermo Ronderos, and Joelle Toledano. ‘First Steps Towards New Postal Economics Models for Developing Countries: Learning from the Latin American Experience’. In Postal Economics in Developing Countries: Posts, Infrastructure of the XXIst Century? Universal Postal Union, n.d. p. 25 53. Commicion nacional de communicacion. Informe anual del mercado postal ano 2010. p. 10 54. Azpiazu, D., Basualdo, F., Manzanelli, P., What has postal liberalisation delivered? The case of Argentina. August 2009. p. 23 55. Commicion nacional de communicacion. Informe anual del mercado postal ano 2010. p. 8 56. Azpiazu, D., Basualdo, F., Manzanelli, P., What has postal liberalisation delivered? The case of Argentina. August 2009. p. 28 57. Commicion nacional de communicacion. Informe anual del mercado postal ano 2010. p. 29

16 UNI Global Union On the European level, competitors have had a harder time making inroads in the postal market. New entrants in the market only have a market share of 4 percent in the mail market, 7 percent in direct mail and 30 percent in publications. The two segments of the postal sector which face heavy competition with more than 50 percent carried out by private operators are unaddressed mail and parcels.58 At the high end of competition in Europe are the Netherlands with competitors having 13 percent market share, Germany, with competitors having 11.8 percent market share and Sweden with Bring CityMail having approximately 11 percent of the market.59 Even at the high end, the scale of competition is much lower in Europe than in many Latin American countries.

In New Zealand, competitors hold a similar market share as those in Europe at 10 percent. Furthermore, as one of the more longstanding examples of postal liberalisation, the status of competition has not changed much over time. Smaller companies have come and gone while four larger operators continue to offer services.60

In many European countries, one or two major competitors have developed rather than a larger number. In the Netherlands, PostNL maintained approximately 85.7 percent and Sandd approximately 13 percent of the market in 2008.61 The remaining market share consists of small, local or regional companies. Sandd has an extensive network covering approximately 60 percent of the country.62 In the Swedish letter market, there are two main competitors, PostenAB, part of PostNord AB, a merger of the Danish and Swedish posts, and Bring Citymail, a subsidiary of the Norwegian postal service. Bring Citymail went bankrupt several times but after changes in the postal legislation, it has now been profitable for three years.63

The situation is similar in Germany. The market share of competitors increased from 9.3 percent in 2009 to 10.4 percent in 2010. By the time of full liberalisation in Germany, around 1400 licenses existed, many of them never used actively. Today around 850 licenses exist, amongst them only 440 companies use their own employees.64 Most private postal operators are small and provide only local postal service. These small operators have agreements with other mail carriers, including Deutsche Post DHL, to cover greater distances. In most regions, there will only be Deutsche Post DHL and one other competitor.65 It is expected that the number of competitors in the mail sector will decrease in the future because it is difficult for three to four competitors to gain a large enough volume to compete with Deutsche Post DHL.66 There are similar trends in many countries – often there are only two operators with a significant market share with the remaining operators being small, local companies.

The German Monopoly Commission recently released a report expressing concern about the lack of competition in Germany. They argued competition has stagnated due to “institutional obstacles to competition”.67 They proposed changes in price regulation, an end of Deutsche Post DHL’s VAT exemptions and stronger powers for the regulator to investigate and prevent “abusive” behaviour by Deutsche Post DHL.68

58. European Social Dialogue Committee of the Postal Sector. Final Report: Social partners preparing for change. VS/2010/0385. p. 24 59. European Social Dialogue Committee of the Postal Sector. Final Report: Social partners preparing for change. VS/2010/0385. p. 24 60. Kenny, A., Beyond the Propaganda, Postal Deregulation in New Zealand, EPMU, Wellington, 2006. According to NZ Post estimates. 61. European Social Dialogue Committee of the Postal Sector. Final Report: Social partners preparing for change. VS/2010/0385. 62. Martins, S., Nelen, B. Abvakabo, (2012, July 17). Personal interview. 63. Trade Unions preparing for change in the Postal Industry. Report from Bucharest meeting for EC Project. 2012. p. 16 64. ver.di case study, 2012 65. Velarde, C. Tough Proposition: How have private posts in Germany fared since liberalisation of the market? Postal. September 2011. 66. Eugen Pink, general manager of the Federal Association of German Postal Service Providers, as quoted in Velarde, C. Tough Proposition: How have private posts in Germany fared since liberalisation of the market? Postal. September 2011. 67. CEP Research. German watchdogs criticise lack of competition on the domestic domestic postal market. 20 December, 2011. 68. Post & Parcel, Call to boost competition in “stagnant” German letters market. December 20, 2011.

Postal Liberalisation: The Issues, the Impact and Union Responses 17 Often the traditional operators launch subsidiaries that compete in their own market and/or in other countries, however several have closed or been sold in recent years. For example, Deutsche Post DHL launched SelektMail in the Netherlands, which was taken over by its competitor Sandd in 2011. In 2006, PostNL launched its own low-cost subsidiary, VSP, in the Netherlands, which stopped operation in 2011.69 Deutsche Post DHL also closed down its lower cost subsidiary in Germany, First Mail, after a court ruling prohibited it from charging lower prices than its parent company.70 While in Austria, one of the three companies to have obtained a license since the market liberalised is a fully owned subsidiary of Austrian Post AG.71

In Spain, there are a number of small companies at the local level that have formed UNIPOST, which is the traditional postal operator’s primary competitor in the logistics and transport sector.72 The number of operators in the UK postal market has increased year on year from 14 in the year following market opening, to 52 in 2011. The scale and nature of these operators varies significantly, from sole traders to national bulk mail companies.73

In Senegal, large billing companies as well as some banks have parallel and independent postal networks. These networks deliver their own mail to their customers (invoices, bank statements, etc.). During 2012, 13 new operators in mail distribution have been approved outside of those who had long existed. The trend since the monopoly was reduced in 2006 is the regular emergence of new operators. In Togo, where the postal market is fully liberalised, the volumes remain low in the overall market and with the designated operator. In 2008, there were seven competitors licensed to operate.74

In the wake of postal liberalization in Japan, private postal operators have started to provide local designated services and high value added services, rather than General Correspondence Delivery Service with high entry requirements. Therefore, these new entrants have not had a large impact on Japan Post. In 2012, 384 companies participated in the special delivery market. By the end of 2006, companies in the special delivery market handled 628 million items and made 6.9 billion yen in profit. However, this is small in comparison with Japan Post at 19.1 billion items handled and approximately 1,334.3 trillion yen in profit.75

It is apparent that great variation exists in the presence of private operators in liberalised postal markets and market share. Much depends on the state of the traditional operator, the regulations in place, the licensing and entry requirements, and the fact that the margins for profit in the letter business are very slim.

Postal liberalisation and the environment Postal liberalisation also affects the environment. “The same number of letters would be delivered to the same points of call by more vehicles. The reduced delivery density would result in unnecessary use of fuel, more pollution and more traffic problems.” As many postal operators attempt to make their operations greener, postal liberalisation has the opposite affect with more vehicles covering the same territory.

Bickerton, G. Postal deregulation: Its impact on postal workers and the response of a postal union. Paper for the 14th Conference on Postal and Delivery Economics, 2006.

69. Abvakabo. The postal market in the Netherlands. Presentation to Trade Unions Preparing for Change workshop, Bucharest. 2 February, 2012. 70. Geiger, F. Deutsche Post to shut First Mail’s letter business. Market Watch. 22 November 2011. 71. GPF Case Study, 2012. 72. European Social Dialogue Committee of the Postal Sector. Final Report: Social partners preparing for change. VS/2010/0385. p. 25 73. CWU UK case study, 2012 74. Universal Postal Union. Togo Integrated Postal Development Plan, 2008. 75. JPGU Case Study, 2012.

18 UNI Global Union The impact of postal liberalisation on postal workers’ jobs

The postal sector is one of the most labour-intensive sectors in the services industry. Letters have to be collected, often sorted, at least partially, by hand, transported and then delivered by people. According to Copenhagen Economics, labour costs represent 60 percent of postal operators’ costs in Europe.76 Therefore, labour represents one of the key segments in which to cut costs for postal operators.

The elimination of the traditional postal worker job in the Netherlands In the Netherlands, PostNL has dramatically shifted positions from traditional postal workers to mail deliverers on part-time contracts. Competitors have used self-employed deliverers.

Postal worker: Ninety percent of traditional postal workers are employed full-time with good wages and working conditions. They are highly unionised with Abvakabo and CNV. However, PostNL has been trying to phase out this job classification as the company now tries to process and deliver the majority of mail three days per week. The number of traditional postal workers was already reduced and a further reorganisation will fully eliminate the classification in the next few years.

Mail deliverers: PostNL has expanded the number of mail deliverers to replace traditional postal workers. These workers earn close to the minimum wage with low wage increase increments. They have a lower pension than traditional postal workers, vacation days that are one above the statutory minimum and some limited bike repair compensation. Barely any of the workers are unionised though there is a collective agreement in place.

“Mail deliverers pick up their mailbags from a dense network of depots, often within walking or cycling distance from their homes, and deliver mail in their local neighbourhood. They can combine this work with other employment, study, leisure or family activities. This new structure creates jobs for people who might otherwise struggle to find work, such as mothers re-entering the workforce, creative professionals who need fixed income and pensioners who wish to remain physically active.” PostNL 2011 Annual Report, p.33

Self-employed deliverer: This type of employment is found in competitors to PostNL. Sandd and VSP hire primarily self-employed deliverers who work two days per week and are paid by piece. There have been attempts to have more of these workers on employment contracts. The unions have reached an agreement with the companies to increase the number of workers with employment contracts. As of July 1, 2012, 26 percent of staff are now on employment contracts and companies must reach 40 percent by 2013. Progressively they must achieve 80 percent. The government has said if the companies don’t achieve this level, it will impose 100 percent contracts. However, Abvakabo is not sure the government will intervene as they failed to do so in the past. Workers on an employment contract, barely any of whom are unionised, are covered by a collective agreement negotiated by FNV Banganotten and Abvakabo, which is basically the minimum by law.

“It is a bad thing that mail deliverers have no social insurance. If I start to calculate, I end up earning 50% of the minimum wage and without unemployment benefits, pension accumulation, days off, vacation pay or continuation of my pay in the case of an illness.” FNV Bondgenoten, Colophon. Intermezzo: The fight for more districts.

76. Main developments in the postal sector (2008-2010), Copenhagen Economics, November 2010, Final report, p.153

Postal Liberalisation: The Issues, the Impact and Union Responses 19 Many postal operators have been looking to reduce their staffing numbers due to declines in mail volumes and technological change even in non-liberalised postal markets. However, the pressure to reduce labour costs is even greater in competitive postal markets. Copenhagen Economics makes this point: “The high proportion of labour costs among NPOs [national postal operators] make layoffs, wage reduction and changes in employment structures effective and attractive measures to reduce costs to remain competitive.”77 Copenhagen Economics makes the distinction between countries where postal workers’ wages correspond to similar work in the private sector and those where they are higher. They argue in the first situation, exemplified by Sweden and the UK, that there is little room for new competitors to offer lower wages. In the second case as exemplified by Germany, New Zealand and the Netherlands, they argue that downward pressure is placed on wages and employment conditions for the incumbent.78 Regardless, competitors will compete on the basis of lower employment and labour conditions where they are not prohibited from doing so by minimum wages, sectoral wages, collective bargaining agreements or social regulations.

Level of postal employment Often prior to or post-liberalisation, traditional postal operators cut the number of employees in their operations. This is carried out through non-replacement of retiring staff, early retirement of employees or dismissals. In Austria, Belgium, Germany and Sweden, between15 and 37 percent of jobs were cut during the liberalisation process.79 However, it is difficult to isolate the impact of postal liberalisation from other significant factors such as technological change and decreasing mail volumes.

The level of postal employment in Germany has been reduced significantly. In 1999 Deutsche Post AG employed more than 310,000 workers. Today, only 180,000 employees remain.80 That’s a staffing reduction of 42 percent. Employment in Austria has decreased heavily with no accompanying job creation or shifting of jobs to new competitors. In 2005, there were 24,177 postal workers while in 2011, there were 19,907 employees, a decrease of 4,270 employees.

In Italy, postal unions and the post office signed major agreements in July 2010, which allowed a significant reorganization of delivery operations. The impact on employment is being dealt with through the reassignment of employees within post offices, financial incentives for voluntary redundancy, hiring children of employees, the recruitment of 500 new employees and a solidarity fund, to which employees contribute 0.15 percent of their monthly salary and the company contributes 0.375 percent.81

In the Netherlands, the number of traditional postal workers was reduced from 15,000 full time jobs in 2005 to 11,000 in 2010. A further reorganisation is currently taking place, with expected redundancies of 11,000, which would effectively wipe out this classification. The unions have negotiated an agreement to reduce redundancies. It is expected 4,500 employees will leave through attrition, 2,000 through voluntary departures and 4,500 through forced redundancies. They will try to place employees subject to forced redundancies in other positions in the company.82

In the lead up to liberalisation, there has been a considerable drop in the number of Hungarian Post Office employees. In 2002 there were 43,997 full-time and part-time employees. In 2011

77. Main developments in the postal sector (2008-2010), Copenhagen Economics, November 2010, Final report, p.154 78. Main developments in the postal sector (2008-2010), Copenhagen Economics, November 2010, Final report, p. 5 79. Privatisation of public services and the impact on quality, employment and productivity (PIQUE) Summary Report, Vienna 2009, p. 26 80. ver.di case study, 2012 81. European Social Dialogue Committee of the Postal Sector. Final Report: Social partners preparing for change. VS/2010/0385. p. 31 82. Martins, S., Nelen, B. Abvakabo, (2012, July 17). Personal interview. 83. Hungarian Postal Trade Union case study, 2012 84. CWU UK case study, 2012

20 UNI Global Union Minimising the impact on workers Many unions have negotiated processes to minimise the impact of job losses or job relocations on workers.

CWU UK: The union and Royal Mail have negotiated agreements on workforce reduction, in particular Managing the Surplus Framework (MTSF), which sets redundancy terms, processes for redundancy and relocation, and enhanced terms for those affected staff. As a result, major restructuring has been achieved without any compulsory layoffs.

SEKO: In Sweden, the program “Futurum” was introduced in agreement with SEKO, which made it possible for employees to continue their employment for another two years with full salary, training and job-search resources in case they chose to leave the company voluntarily. These costs were partly paid by the company and partly by the government.

They also had a special program for workers over 58 years who could maintain their salaries until retirement without working in the postal company.

ver.di: In Germany, ver.di negotiated that dismissals due to reorganization of the company are prohibited at Deutsche Post. In 1994, the union achieved enhanced protection for employees. If an employee’s position is eliminated or if the content or scope of the job has changed, the company is obliged to offer a reasonable and equivalent occupation at the same pay rate to the affected employee. Criteria for “reasonable” jobs are included in the collective agreement. there were 33,901. This means a loss of 9,766 jobs or a 20 percent drop in employment since 2002.83 In the UK, 39,786 full-time positions at Royal Mail were eliminated in five years. In 2005, there were 181,114 full-time positions while in 2010, there were 141,328 full-time positions.84

In Japan, the number of full time workers in mail delivery has gone down from approximately 120,000 in 2003 to 98,000 in 2012. That’s a decrease of approximately 22,000 positions. The main reason for this reduction was business streamlining and mechanization, however, it is thought building competitiveness had an indirect influence.85

In three of the earliest postal liberalisation cases, a significant number of positions were also cut. The number of postal workers in the New Zealand Post declined by 43 percent from 12,006 in April 1987, to 6,892 full-time equivalent staff in March 1997. However as of January 2006, these levels had risen to 7,500 full-time equivalent employees. While in Sweden, employment was cut in half from 60,000 in 1985 to 30,000 in 2011, not only due to liberalisation but also due to automatisation and centralization of sorting centres. In Argentina, 10,000 workers lost their jobs in the liberalisation process, an almost 50 percent reduction in staff. In general these workers did not move on to work for the private competitors.86

Changes in wages and working conditions Apart from a reduction in staffing, there is often a significant change in wages and working conditions linked to postal liberalisation. Furthermore, many of the new entrants rely on precarious work and have a low level of unionisation. According to a study carried out by UNI Europa, new postal operators pay on average 25 percent less than the large national postal companies. However, this situation varies in different areas of the world. In some cases such as Colombia, Egypt, South Africa, Pakistan, the national operator has lower wages than competitors.87

85. JPGU case study, 2012 86. AATRAC case study, 2012 87. UNI Global Union. UNI Post & Logistics Global Union Questionnaire Highlights. 2011. p. 3 88. European Social Dialogue Committee of the Postal Sector. Final Report: Social partners preparing for change. VS/2010/0385. p. 28

Postal Liberalisation: The Issues, the Impact and Union Responses 21 There is often pressure on unions in incumbent operators to negotiate new contracts with lower wages and working conditions for newly hired employees resulting in a two-tiered wage and working conditions structure for employees carrying out the same work.88 One aspect of these changes of terms and conditions of employment is the gradual elimination of civil servant status amongst employees. This status often involves higher salaries and better working conditions, dating back to the time when post offices were government departments. The number of postal civil servants in Germany and Denmark has been dramatically reduced to less than 10 percent in 2009 as employees with this status have retired.89

In Germany, the salaries at Deutsche Post DHL were lowered for new employees in 2001 by a new collective agreement inline with conditions in the logistics and freight sector. However, salaries are now 30 percent higher than in 2001. In 2007, the German government introduced minimum wages for postal workers in the entire sector, however, these were finally struck down by the highest federal court because employers, employees and partners had not been given sufficient opportunity to comment in writing on the proposed law. Ver.di has called for their reintroduction with the defects to the law remedied.90 In terms of trade union density, there is still high density in Deutsche Post, however, all efforts to negotiate collective agreements with the new competitors in Germany have failed.

Working conditions have also changed at Deutsche Post. Working pressure and speed has been increased by restructuring and the high level of automatisation in the sorting centers. Furthermore, positions for workers with disabilities or illnesses have disappeared.91 In the Netherlands, there have been several restructuring programs (see page 17 for more information). The company is pushing every day for more efficiency. According to Abvakabo, “Workers are fed up with work load, abuses and intimidation by management.”92

To avoid the sale of Austrian Post AG’s assets, the trade union agreed to a new collective agreement for employees starting after August 1 2009, which is comparable with other collective agreements in the sector. This new contract involved a massive reduction in working conditions and social insurance with salaries decreased by up to 40 percent.

In Argentina, jobs, functions and hours were made more flexible after liberalisation, especially while the post office was managed by the private consortium.93 The post office unilaterally introduced modifications to eliminate various committees which involved workers in the company operations and in internal conflict resolution. Workers also lost many rights in their collective agreement such as working hours with an increase from 40 to 48 hours a week, an extension of the probation period for newly hired employees, a reduction in annual leave and the elimination of the six percent employer’s contribution for complementary benefits.94 Many of the job losses and some of the reductions in working conditions have been regained since the private concession was terminated.

In some cases, unions have been effective in organising workers at new competitors. In Sweden, SEKO has recently achieved a single collective agreement for all employees in the designated operator and new competitors. There are also discussions taking place about sectoral collective agreements in France, Italy and the Netherlands.95 In Argentina, there is one collective agreement for postal workers in the designated operator and another agreement for those

89. Main developments in the postal sector (2008-2010), Copenhagen Economics, November 2010, Final report, p. 157 90. See EIRONLINE. Court ruling abolishes minimum wages in postal services sector, http://www.eurofound.europa.eu/ eiro/2010/02/articles/de1002049i.htm 91. ver.di case study, 2012 92. Abvakabo. The postal market in the Netherlands. Presentation to Trade Unions Preparing for Change workshop, Bucharest. 2 February, 2012. 93. AATRAC case study, 2012 94. Azpiazu, D., Basualdo, F., Manzanelli, P., What has postal liberalisation delivered? The case of Argentina. August 2009. 95. European Social Dialogue Committee of the Postal Sector. Final Report: Social partners preparing for change. VS/2010/0385. p. 19

22 UNI Global Union in the private sector. Recently, a new bargaining unit was formed for same-day couriers.96 In Finland, the government applied the conditions for unaddressed mail delivery workers in the collective agreement signed by Itella and PAU to all competitors. This quadrupled wage costs for competing companies. Though some companies launched a court challenge, the court ruled in 2009 that the agreement was binding. Now, a new trade union and employers’ organisation for new entrants has been formed, which has negotiated a collective agreement for unaddressed mail.97 While in Ireland, the CWU Ireland has organised workers in DPD, UPS, Print post, Data Ireland and One Direct.

However in many cases, there is little unionisation in new entrants or more precarious job classifications the national operator has introduced. In theNetherlands , there is an extremely low level of unionisation amongst mail deliverers at PostNL and the few private sector deliverers that have an employment contract. Abvakabo currently has an organising campaign to sign up these workers into the union. In Japan, the JPGU has been organising irregular workers, 25 percent of which are now unionized. As a result of negotiations with postal management, approximately 14,500 irregular workers were transferred into regular positions from 2004 to 2008. In Hungary, the number of collective agreements entered into by the new market players is negligible due to the number of self-employed workers and the lack of union presence.

An increase in precarious employment New market operators who seek to compete on price and cost tend to have a different employment structure than national postal operators. Part-time work, precarious jobs, the use of self-employed and agency workers increasingly characterise postal jobs today, particularly in the new operators.

Amongst the new market entrants in Germany for example, 80 percent of employees are on part- time contracts, and 59.4 percent of these have precarious jobs. Furthermore, the number of self- employed workers increased by two-and-a-half times between 1995 and 2005.98 In 2008, 175,000 workers were employed in the German letter market with 30,000 workers in new competitors. Fifty- two percent of those 30,000 have a marginal contract with salaries under €400 per month. The newly created positions are mainly precarious with poor working conditions and without a living wage.

Table 1.1 – Employment forms in the German postal sector

70

60

50

40 % 30

20

10

0 German Post AG Competitors Total Full-time Part-time Marginal part-time

96. Interviews with FOECOP, FOECYT and AATRAC, 2012 97. European Social Dialogue Committee of the Postal Sector. Final Report: Social partners preparing for change. VS/2010/0385. p. 21 98. Privatisation of public services and the impact on quality, employment and productivity (PIQUE) Summary Report, Vienna 2009, p. 55

Postal Liberalisation: The Issues, the Impact and Union Responses 23 In the UK, the CWU successfully negotiated a national commitment from Royal Mail that the proportion of part-time workers will not increase above 25 percent with 75 percent being full-time. As for competitors, there is not much current research on working practices in the UK. In general, new entrants have favoured precarious employment structures such as part-time and flexible working schedules, at lower wages and with fewer workplace benefits than in Royal Mail.99

Self employed workers are becoming the norm in the competitors in Hungary as well.100 This mode of employment shifts the employers’ costs onto workers. The SODIPER project recently identified the self-employed driver as the last step in a chain of subcontracting in the parcel market in Austria, Germany, the Czech Republic and Hungary.101

In Japan, employment patterns have increasingly shifted from full time workers to part time workers. Today, Japan’s postal service has approximately 100,000 irregular workers who are part-time, agency or retired workers. There are more irregular workers on fixed-term employment contracts than regular workers in the mail delivery sector. These workers have no guarantee of contract renewal and working conditions are lower than those of regular workers.

Outsourcing and subcontracting There have also been examples of outsourcing taking place alongside or before the liberalisation process. In Austria, Outsourcing as 40 percent of parcel activities have been outsourced to risk avoidance subcontractors while in the Netherlands, PostNL has contracted out approximately 80 percent of parcel delivery. “Outsourcing or PostNL also has plans to subcontract parts of mail-delivery subcontracting tends to in the future. be considered by the business world as a In Argentina, the post office originally began outsourcing cost saving mechanism. in the late 1970s through partial subcontracting of ground That is, the aim is to transportation services. However, under the private concession cut labor costs, but from 1997 to 2003, the company spun off functions like fundamentally the information technology system maintenance and the hiring intention is to lower the of temporary workers into satellite companies. Moreover, “risk” represented by the since 2000, the entire mail ground transportation service was hiring of wage-earning outsourced. Prior to liberalisation in the UK, catering, building personnel, transferring maintenance, security, and part of information technology such responsibilities services were all outsourced. and costs to other companies.” In some cases, outsourcing can be prevented through strong collective agreement language. In Germany, ver.di was able to 2009 case study on Argentina prevent outsourcing and subcontracting due to their collective agreement with Deutsche Post DHL.

The impact of postal liberalisation on quality service and prices

Postal liberalisation is also linked with a reduction in the number of post office network access points, mailboxes and post offices. Service is also affected given the introduction of constantly changing, poorly paid mail distributors with little training in certain countries. In many cases, the social tasks that used to be a part of the postal worker’s profession are no longer being performed.

99. CWU UK case study, 2012. 100. Hungarian Postal Trade Union case study, 2012. 101. Precarious working conditions in the parcel services: to take a stand and deliver our message. Union brochure of the SODIPER project. FORBA. Self-employed workers in the courier sector have also been researched in Canada - see Bickerton, G., Warskett, R. Contractors or disguised employees: A case study of couriers in Winnipeg. Just Labour, vol. 6 & 7 (Autumn 2005)

24 UNI Global Union Impact on quality postal service Postal liberalisation, especially in the context of decreasing mail volumes, is often accompanied by the closure of post offices. Often in the cost-saving restructuring, corporate post offices are converted to franchises and services are reduced. According to a PIQUE study, “In postal services, the incumbent monopolists have put substantial effort into speeding up delivery processes and delivering much of the mail only one day after posting. At the same time, however, they have significantly reduced the number of post offices and the number of agents working in the post offices, making it more difficult and time-consuming for private customers to use the service.”

In Germany, Sweden and the Netherlands, there are no longer any non-franchised post offices. In Germany, the last official post office was sold to Postbank in 2011. Now franchised postal points exist in supermarkets, gas stations or kiosks. A contract guarantees that Postbank also offers postal services in their shops. Citizens haven’t received any benefit but are confronted by an ongoing reduction of postal infrastructure

In the Netherlands, the last corporate post office closed in January 2012 with the closures having begun in 2009. Post offices used to be a joint venture between ING and PostNL but now services have moved to supermarkets and book stores. The number of sorting centres has also been reduced from 376 to 6. This year, PostNL opened two central locations and closed approximately 20 local centres. The central locations rely on part time workers whose only role is to sort the mail. They work from around 4-9 am and are predominantly students and homeworkers. This new model, which was introduced in 2012, was a disaster with serious quality issues. PostNL has developed 200 improvement points to work on before relaunching the centralization project in 2013.102

In Austria, the number of complaints received for missing or damaged mail since the restructuring of Post AG has increased by 30 percent. The Kronen Zeitung, an Austrian daily, wrote the following in an article published 27 May 2010: “Last year over 144,000 postal customers complained because they were dissatisfied with the letter or parcel delivery service. As a result, the number of complaints has increased by 30% since 2008 (…)”.103

In Hungary, 514 post offices were closed between 2002 and 2010. In theUK , the number of crown and agency post offices has declined by 2,558 since Royal Mail’s monopoly was removed in its entirety.104 The quality of the universal service has also suffered, with deliveries reduced from twice to once a day in 2004, the abolition of Sunday collections in 2007, and delivery times pushed back from early mornings to the middle of the afternoon.105 In Italy, service has been reduced with Saturday delivery now limited to return receipts of registered next day delivery mail and newspapers - only in larger distribution centres.

In Argentina, it is estimated that 2,000 post offices closed throughout the liberalisation and private concession period. The new operators were only interested in the most populated areas and profitable customers, leaving the rest of the country to a marginal universal service with inadequate funding, provided by the public operator.106

In 1987, New Zealand Post took over the previous postal network of 1,244 post offices, of which 906 were full post offices and 338 were postal agencies. The Government retained the title to 600 post offices that were identified as uneconomic and paid subsidies to New Zealand Post and Post Office Bank Ltd to maintain existing services. The subsidies ceased on 5 February 1988 and 432 post offices were closed to become “post only” agencies. At the remaining 168 locations,

102. Martins, S., Nelen, B. Abvakabo, (2012, July 17). Personal interview. 103. Die Krone online, 25.05.2010, http://www.krone.at/Oesterreich/Beschwerde_ueber_Post_um_30_Prozent_ angestiegen-144.000_Eingaben-Story-201966 [Translation] 104. Baldwin, J., Furey, A. (2012, October 25). Personal communication. 105. CWU UK case study, 2012. 106. AATRAC case study, 2012.

Postal Liberalisation: The Issues, the Impact and Union Responses 25 agencies were closed to become postal delivery centres or stamp retail outlets. Currently there are 995 retail outlets, of these some 150 are Corporate PostShops with a unionised workforce of 1000 Retail and banking workers and managers.107

La Poste in France is also implementing measures to save money by reducing services. They are transforming many traditional post offices into agencies operated with local authorities or post offices managed with other service providers. They are charging municipalities and companies for doorstep delivery, putting groups of letterboxes at the entrance to villages or housing developments and adding an extra two-centime charge for next day delivery.108

Prices In Europe, the letter price has risen in 24 countries What does the European Directive say since 2000 in real terms. The about prices? standard letter only became cheaper in five countries.109 Prices for USO services should meet these conditions: Furthermore, while prices for ●● Prices should be affordable. many citizens have increased, prices for corporate clients ●● All users, independent of geographical location, and, in with high mail volumes have light of specific national conditions, should have access tended to decrease in a to the services provided. liberalised markets. ●● Prices should be cost-oriented and give incentives for Many of the countries an efficient universal service provision. surveyed in a recent Deutsche Post study increased their ●● Member States may decide that a uniform tariff will be letter prices in 2010 or at the applied throughout their territory and/or cross-border for beginning of 2011: reasons relating to the public interest.

●● Belgium, Denmark, DIRECTIVE 2008/6/EC France, Greece, UK, Luxembourg, the Netherlands, Norway, Austria, Slovenia, Spain and Hungary increased the prices for both domestic and international letters.

●● The Bulgarians increased prices for domestic letters.

●● Germany, Italy and the Czech Republic increased prices for letters to other European countries.110

The average inflation adjusted price increase for the 29 surveyed European countries was 51.47 percent. The only countries that had inflation adjusted price decreases were Italy, Estonia, Germany, Portugal and Sweden.111

The most researched country regarding price changes is Sweden where the evidence suggests that prices for private individuals and small mailers increased while prices for big mailers decreased. Sweden post decreased its prices for presorted mail in response to City Mail’s lower prices. In order to compensate for the loss of revenue, the post office increased its unsorted

107. Kenny, A., Beyond the Propaganda, Postal Deregulation in New Zealand, EPMU, Wellington, 2006. p. 102. 108. European Social Dialogue Committee of the Postal Sector. Final Report: Social partners preparing for change. VS/2010/0385. p. 34 109. Deutsche Post, Letter prices in Europe: Up-to-date international letter price survey. March 2011. p. 12 110. Deutsche Post, Letter prices in Europe: Up-to-date international letter price survey. March 2011. p. 5 111. Deutsche Post, Letter prices in Europe: Up-to-date international letter price survey. March 2011. p. 12

26 UNI Global Union mail prices, affecting the average citizen and small businesses. “In the ten years following 1993 the price increase for the popular domestic overnight 20 gram letter was 90 per cent. Even considering that approximately one-third of this increase was due to the imposition of VAT on postal services the increase far outstripped the accumulated national inflation rate of 14 per cent. Postage rate increases for some other products were even higher.”112

In the Netherlands, the postal operators have been in a bidding war for corporate clients. PostNL is required by law not to set prices under the actual cost of providing the service, however, this is not currently enforced by the regulator. Abvakabo has been pressuring all involved to raise the prices charged in order to ensure adequate funding of labour costs. They have successfully gotten the regulator to agree to verify PostNL’s prices prior to them being set. Sandd, the main competitor, is concerned PostNL will lock in long term contracts before this happens.113

In Austria, stamp prices for the standard letter have increased by approximately 12 percent since the liberalisation of the postal market.114 In the UK, stamp prices have risen over the liberalisation period at their fastest rate in the history of the British postal service. While historically stamp prices have risen more slowly than inflation, this trend has now been reversed. Stamps are becoming an unaffordable means of communication for some universal service users, in particular vulnerable people. This contravenes the first European postal directive.115

At the same time, it is likely some price increases would have been required to maintain a stable financial position for Royal Mail even without liberalisation given the historically low price levels.116

One of the most significant changes to the regulatory regime in the UK has been the deregulation of all stamp prices, save for a cap on the price of 2nd class letters and parcels. In 2012, the first year since the removal of price controls, prices again rose significantly.

UK stamp price increases 2012

2011 price (pence) 2012 price (pence) % increase

1st class letter 46 60 30.4

2nd class letter 36 50 38.9

1st class large letter 75 90 20.0

2nd class large letter 58 69 19.0

Source: Royal Mail117

112. Bickerton, G. Postal deregulation: Its impact on postal workers and the response of a postal union. Paper for the 14th Conference on Postal and Delivery Economics, 2006. See also Toledano, J. Status of the postal service twenty years after the green paper: A Franco-European perspective, Paper for the 21st Conference on Postal and Delivery Economics, 2012. 113. Martins, S., Nelen, B. Abvakabo, (2012, July 17). Personal interview. 114. Wiesner, V. Email communication. 12 October, 2012. 115. Directive 97/67/EC, Chapter 2, Article 3.1 116. CWU UK case study, 2012 117. CWU UK case study, 2012

Postal Liberalisation: The Issues, the Impact and Union Responses 27 Stamp price versus inflation in the UK 2001 - 2011

Source: CWU/ONS118

2nd class stamp price vs. RPI 2001-2011

200

190

180

170

160

Index 150

140

130

120

110

100 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Year Price RPI

In some cases, stamp prices have remained relatively unchained. In New Zealand, there have been only three price changes, including a reduction, since deregulation. The price of a basic postage stamp went up to 45 cents in 1991, but was reduced again four years later to its previous level. The price reduction was intended to put pressure on potential competitors entering the market in the future, and to keep mail competitive in the face of threats from other media. In early 2004, the decision was made to increase the basic retail stamp price again by five cents from 5 April 2004. The prices of basic postal services in New Zealand, therefore, have been relatively stable since 1987. In real terms, they have fallen by more than 50 percent over the period. In Germany, the prices for letters haven’t been raised since 1998. In fact, the tariffs, which are still in effect, were lowered in 2003 (55 eurocent for the standard letter). However, competition has led to a heavy decrease in prices for big customers by rebates and letter-consolidations.

At the same time as prices have increased for regular citizens in many countries, corporate clients have been getting lower rates for bulk mailings that are presorted and meet certain addressing standards. Competitors have also been cherry picking high value products at higher costs to maximise their profit. InArgentina , private operators were concentrated in corporate submarkets where unit prices were the highest.

118. CWU UK case study, 2012

28 UNI Global Union Conclusion This section has discussed how postal liberalisation can affect workers and quality and accessible postal services. The specific impact of postal liberalisation versus other changes such as declining mail volumes and technological change is difficult to assess.

However, it’s clear liberalisation is linked with a decline in working conditions and quality postal services such as:

●● staff reductions,

●● lowered wages and working conditions,

●● post office closures,

●● declining quality of service, and

●● increasing stamp prices for individual citizens.

In the context of liberalisation, national postal operators are under pressure to cut costs in order to compete with private operators which often rely on precarious work. These workers in private competitors are often self-employed, work part-time or are employed through staffing agencies. There is a great need for postal unions to engage in fresh and energised campaigns to organise these workers. The following section will discuss some key strategies postal unions have used to prevent postal liberalisation, minimise its impact and reinforce and expand the unique role and importance of post offices in social and economic development.

Postal Liberalisation: The Issues, the Impact and Union Responses 29 Section III – Postal liberalisation: union responses

Unions have been engaging in innovative and strategic approaches to either prevent postal liberalisation or protect workers and the postal service from the effects of postal liberalisation. This chapter will share some key examples of unions’ struggles that we can all learn from and incorporate into our own work. It will outline:

●● Campaigns trade unions undertook against postal liberalisation in Norway and Canada.

●● Postal laws that include social regulation, which maintains working conditions and supports public postal service in Belgium, Austria, and Hungary.

●● How organising workers and collective bargaining improves working conditions in the entire sector using examples from Ireland, New Zealand, Argentina and Sweden.

●● How innovation and strengthening the universal service can support good postal worker jobs using Brazil as an example.

Campaigns against postal liberalisation

The unions in Norway and Canada held effective campaigns against postal liberalisation. Both unions have been at the forefront of educating their membership, politicians and the public about the risks of postal liberalisation.

Norway In Norway, Postkom launched an intensive campaign against implementing the European Union 3rd Directive to liberalise its postal market. Norway is not a member of the EU but is closely associated through its membership in the European Economic Area (EEA). As part of the EEA agreement, Norway is supposed to adopt most EU market legislation, which includes the 3rd Directive on postal market liberalisation. The agreement has a reservation clause to opt out of legislation, however, this option had never been used in the 16 years of the agreement’s existence.

Postkom’s struggle began in 2004 after the conservative coalition government decided to liberalise the Norwegian postal market as of 2007. During the election in 2005, a red-green party coalition won the election and reversed the decision to liberalise. At Postkom’s Congress in 2008, delegates demanded that the government say no to EU postal liberalisation.

Postkom worked with economists and scholars at home and abroad to show there was no existing positive example of postal liberalisation. They argued that given the declining mail volumes since 2008, competition would make the situation worse. They worked with consultation bodies and achieved the backing of the LO, the Norwegian Confederation of Trade Unions. The union knew they had to win the general election in 2009 in order to prevent postal liberalisation.

From 2008 to 2011, Postkom undertook a multifaceted and intensive campaign involving:

●● Media coverage through radio, TV and newspapers - they ensured media coverage throughout the country from interviews to letters to the editor. All local newspapers had news of their work.

●● Research on the issue - Postkom commissioned legal opinions to support their claims

●● Information for the public - the union launched a special web site to inform the public about the directive.

30 UNI Global Union Postkom’s key messages 1. The postal directive is expensive ●● Outside the central areas, service would be more expensive.

2. Postal liberalisation would require increased state funding. ●● Competition would be at the expense of postal workers’ wages and working conditions.

3. The postal directive is bad for service - ●● Liberalisation in a small market does not provide better services. ●● Significant parts of the sparsely populated country risk getting mail two to three times per week, compared with six now.

4. The postal directive is bad for communities ●● The more remote your community, the greater the likelihood of poor and more expensive service.

●● Participation - Citizens could give their support to the campaign through the website.

●● Polling - Postkom commissioned various polls, which eventually indicated that a large majority of the population supported their cause.

●● Demonstrations aimed at three different goals: Messages for policy makers and politicians, gaining the general public’s attention, and motivating their own members.

●● Broader UNI support - UNI held demonstrations in Strasbourg and Brussels in support of Postkom, organized campaigns, informed and met with EU politicians and mobilized postal unions globally.

Postkom’s goal was to bring factual knowledge to all those who would be affected by a possible liberalisation.

From 2009 to 2010, two of the three coalition parties in the government said they supported Postkom’s position. Then, in April 2011, the third and largest government party – the Labour Party – adopted the same position by a large majority. Now, the Norwegian government has demanded a reservation from the Postal Directive.This goal was achieved through years of work, a good strategy and unity.119

Canada The Canadian Union of Postal Workers (CUPW) has become increasingly concerned about the possibility of liberalisation at Canada Post because of global trends in postal liberalisation, a recent government review that considered postal liberalisation, the recent liberalisation of outbound international letters and the Canada-EU trade negotiations.120

119. Saetre, Ingeborg, Speech to UNI Europa Conference, Toulouse, France, 3-5 October, 2011 120. 120 See more information about attempts to promote postal liberalisation in Canada in Bickerton, G. Postal deregulation: Its impact on postal workers and the response of a postal union. Paper for the 14th Conference on Postal and Delivery Economics, 2006

Postal Liberalisation: The Issues, the Impact and Union Responses 31 CUPW had a campaign during the strategic review of Canada Key campaign messages Post in 2008 with the objective to ensure the public and others Hey Harper – Hands off my post office Say no to postal understood that the strategic deregulation Postal deregulation would: review was considering liberalisation, which could have ●● jeopardize universal postal service, an impact on universal, public ●● result in higher prices, reduced service or both, postal service. They aimed to ensure that individuals and ●● destroy jobs and transform good jobs into bad jobs, groups made submissions to the strategic review supporting ●● hurt the environment, and the union’s vision ●● reduce the security and privacy of the mail. of universal public postal service and to ensure the government did not liberalise Canada Post.

CUPW conducted a comprehensive campaign involving:

1. Building strong membership support for campaign objectives. ●● CUPW National sent letters, bulletins and fact sheets to all of its locals.

●● The union produced a postcard, a website, buttons and stickers against postal liberalisation. Members sent over 23,000 postcards to the Canada Post Corporation Strategic Review.

●● The union booked off two postal workers to encourage and help locals.

2. Tactics and tools used to build broad-based support for campaign objectives ●● CUPW sent letters and fact sheets to others in the labour movement, allies, members of Parliament and thousands of municipalities. The union asked organizations to pass a resolution and send a submission to the review.

●● CUPW produced a submission template for CUPW locals to give to local allies in order to encourage participation.

●● CUPW produced and distributed a fridge magnet and YouTube video against postal liberalisation.

●● CUPW locals raised the threat of postal deregulation and the importance of universal, public postal service in their communities by holding public forums and taking other actions.

3. Tactics and tools used to publicize campaign objectives through the media ●● CUPW sent an opinion piece to community newspapers across the country and regularly issued media releases.

●● The union commissioned a poll on deregulation and drafted a media release showing the results - 69.9 percent opposed postal deregulation.

4. Tactics and tools used to reduce the federal government’s desire and ability to deregulate ●● During the election, the union set up two billboards in and near the Minister responsible for Canada Post’s riding and handed out leaflets at a government party convention.

●● CUPW targeted about a dozen ridings and had members call members to ensure they knew about the strategic review and what each party had said about postal deregulation.

●● During the election, all members received a fact sheet outlining party positions on postal deregulation.

32 UNI Global Union As a result of these efforts, the strategic review commission received 833 written submissions from municipalities, organizations and businesses and 596 submissions from individuals, for a total of 1,429 submissions. The submissions revealed widespread opposition to postal deregulation. The strategic review report, which was released in April 2009, recommended against a general deregulation of Canada Post’s lettermail, except for outbound international letters.

Postal laws with social regulation

In liberalised postal markets, having social regulation in postal laws can help maintain good employment and quality postal services. Several unions in Europe have successfully achieved social regulation in their postal laws.

Belgium This is undoubtedly the most comprehensive law that has been adopted, not only in terms of the length of the overall text, but also because the rules and definitions go well beyond the minimum requirements laid down by the European Commission for the provision of the universal service.

The law specifies that any inequitable burden from the USO will be compensated out of the government budget. The postal service is defined as a collection service – not just from the postal network access points, but also from the addresses of private individuals and businesses. The law explicitly refers to the sorting, transportation and delivery of mail items, including express and direct mail (advertising, promotions, marketing), and it applies to all companies including those that provide only some of the services, or form only part of the postal network, or carry out activities that are limited to a particular geographic area. Furthermore, the postal law specifies affordable postage rates.

In terms of entry requirements, all postal service providers must meet stringent standards to be licensed:

●● A geographical coverage requirement in all of Belgium’s three regions121 of 10 percent in the first year, 20 percent in the second year, 40 percent in the third year, 60 percent in the fourth year and 80 percent in the fifth year. This measure was introduced to prevent new market entrants from engaging in cherry-picking.

●● Distribution two times per week after two years of activity.

●● Have a mechanism for returns of non-deliverable mail.

●● Uniform prices throughout the entire territory.

●● Within five years, 80 percent of all staff must be given a contract of employment that guarantees their working conditions in accordance with the provisions of the collective agreement.122

This law ensures that companies entering the market cannot compete on the basis of wage levels and working conditions, cannot just concentrate on profitable sectors, and must maintain uniform, affordable prices for all citizens.

121. Belgium is split into three separate regions, French-speaking Wallonia, Flemish-speaking Flanders and the bilingual semi-province of Brussels. 122. CGSP case study, 2012.

Postal Liberalisation: The Issues, the Impact and Union Responses 33 Austria The Austrian Postal Market Act, which officially came into effect 31 December, 2010, contains extensive provisions to maintain access to the network. The law defines the minimum service level in some detail, including delivery and collection days, delivery times, as well as minimum quality levels.

The purpose of the law is “to ensure that the public and the business sector are provided with diverse, affordable and high-quality postal services”123.The attributes “broad range”, “affordable” and “high quality” go further than the definition used in the EU Directive 2008/6/EC.

In terms of infrastructure and access, the Act specifically addresses the issue of infrastructure and the regulation of access points. The law stipulates that there must be at least 1,650 post offices, and that in municipalities with more than 10,000 inhabitants, as well as in district capitals, 90 percent of the population must have access to a post office within a radius of 2 km. In other areas, the radius is increased to 10 km. Post office branches may be subcontracted, however their numbers, quality requirements such as opening hours, and the range of services to be provided, are set out in precise terms. Post offices owned by Austrian Post AG may not as a rule be closed, unless proof is provided that such offices are not cost-effective. Letter boxes must be placed at intervals of no more than 1000 metres.

As for entry requirements, new market participants need to obtain a license if they wish to carry mail items weighing less than 50g.124 Applicants for a license must not only possess all the necessary infrastructure, reliability and expertise, but must also fulfill certain social conditions: “The licence shall be granted if the applicant complies with the working conditions, including remuneration, which apply in Austria for the employment of staff. The working conditions and remuneration stipulated in the applicable collective agreement shall be deemed appropriate.”125 Thus the granting of licenses is specifically tied to compliance with social conditions.

In conclusion, we can say that there are three positive features in the Austrian Postal Act: 1) it gives a precise definition of the services to be provided which goes beyond minimum requirements; 2) it regulates the number and size of the postal network and service access points in detail, which gives protection against dismantling; 3) social aspects have been taken on board, and minimum standards have been approved which provide some guarantees to employees in the sector.

Hungary With the Hungarian postal market liberalising entirely in 2013, the government began drafting a new postal law in 2011. The Hungarian postal union used examples from other countries in Europe that had already opened their postal markets to lobby for social regulation that would maintain jobs and quality services in their new law. Their position is reflected in the draft law, which is expected to be adopted in late 2012.

The draft law contains substantial changes such as:

●● the definition of universal service;

●● the way universal service should be financed;

●● conditions for entering the postal market, and

●● social and employment provisions.

123. BGBLA_2009 I123, Article 1, Section I, General Provisions, Objective, http://www.parlament.gv.at/PAKT/VHG/XXIV/I/I_00319/fname_165752.pdf 124. Courier services, as well as direct mail firms, are excluded from this obligation. 125. BGBLA_2009_I_123, Article 1.4. Section, § 27 Granting of licences - http://www.parlament.gv.at/PAKT/VHG/ XXIV/I/I_00319/fname_165752.pdf

34 UNI Global Union Competitors can apply for a license to deliver items under the universal service obligation if they meet certain standards. At least 85 percent of priority postal items should be delivered on the following day while at least 97 percent of priority postal items should take no longer than three days. Universal service is considered to mean that each inhabited district must be provided with collection and delivery services. The universal service provider shall ensure that the collection points, not including letter boxes, shall not be more than 5 km away from 95 percent of the district’s inhabitants and not further than 10 km away from 99.5 percent of inhabitants. Each inhabited district should be guaranteed at least one postal item collection point, while for areas with more than 25,000 inhabitants at least one such collection point is mandatory

There are two types of licenses, one for services that are not part of the USO and one for providers of the USO.

(1) Providers of universal services must meet the following standards:

●● A license may only be granted if the service provider can ensure that all the necessary staffing and material requirements can be met and provided that the operator can guarantee prudent operation the service. The conditions required for prudent operation includes harmonious labour relations.

●● If the operator does not satisfy labour requirements or is shown to be in breach of labour relations provisions, the regulatory authority may reject the application.

●● The draft law also stipulates sanctions in the case of non compliance. The regulatory authority shall withdraw the operator’s license if it fails to respect the employment regulations stipulated in the Act twice in one year or if they find that the operator has similarly infringed the provisions of the relevant ministerial decree.

●● The operator must entrust the delivery to:

●● persons on the service provider’s payroll or those who are legally associated with the operator;

●● workers working for or associated with a company subcontracted by the operator as long as the number of these persons does not exceed 30 percent of the primary service provider’s workforce;

This draft postal law includes minimum delivery standards and collection points as part of the USO. It also contains social conditions for operators who wish to deliver parts of the universal service including harmonious labour relations and a maximum percentage of work that can be subcontracted.

Several countries have developed postal laws, which will help limit the impact of postal liberalisation on working conditions and quality postal services through minimum requirements. UNI Europa Post & Logistics has drafted recommendations for social regulation that unions facing liberalisation can use in the struggle for a strong postal law that maintains working conditions and quality service.

Postal Liberalisation: The Issues, the Impact and Union Responses 35 Organising and collective bargaining coverage

Ensuring workers are covered by collective agreements is one key strategy unions can undertake to improve the lives of workers in new entrants and maintain the working conditions of their current members. The less of a difference between wages and working conditions in the incumbent versus the new entrants, the better. There are several different ways of doing this depending on the labour relations system in your country:

●● by company - there is a collective agreement for each company;

●● by public and private sector - there is one collective agreement for public sector workers and another for the private sector;

●● by sector - there is one collective agreement for the entire postal sector.

Organising and collective agreements in new entrant companies Organising workers in new entrants or incumbent company subsidiaries into unions is a key way to protect working conditions in the incumbent postal operator. By negotiating a collective agreement that minimises the differences in wages and working conditions, the downward pressure on employment and labour conditions in the incumbent is reduced. Organising can also make a dramatic difference in the lives of workers in new competitors, many of whom face precarious conditions which affect their health and well-being.

In New Zealand, the EPMU has struggled through collective bargaining to improve the working conditions of workers at ECL, a 50-50 percent joint venture between DHL and New Zealand Post. 126 ECL is over 90 percent unionised and it covers the largest number of workers in the Industry (880). In the ECL Collective Agreement, the EPMU set a new benchmark for courier industry collective agreements. New workers who first joined the Company after 1 April 2004 (some 350 plus workers) were not offered pension plans, had a night rate of $1.00 per hour (now $2.50), a range of work patterns, problems with securing regular hours and or permanent work and no ability to influence the employer. Today, following a campaign of uniting the unionised and non unionised workers, the new collective agreement reflects many of the parent company terms and conditions of employment. The new agreement includes pension plan provisions, deduction clauses for union fees and access to the credit union, Post Office Welfare Trust and New Zealand Post based rates of pay, over time and penalty payments, night rates, service allowance and superior leave entitlements.127

The CWU Ireland has also understood the importance of organising in the broader postal and courier market. To date, they have organised workers at other operators including DPD, UPS, Print post, Data Ireland and One Direct, of which the last three are subsidiaries of An Post. The union is also interested in organising staff in contracted post offices and self-employed drivers in the courier market.128

Public sector and private sector collective agreements

In Argentina, there are two collective agreements in the postal sector - one for public sector workers and another for private sector workers. This has helped minimise the difference in working conditions between the workers at the Argentine Post versus its competitors. In a recent development, a collective agreement is currently being negotiated for workers in the same-day courier sector.

The public sector workers are represented by FOECYT, FOECOP and AATRAC. The collective agreement that is currently in place was negotiated in 1993 when the postal market liberalised.

126. It was announced that DHL will pull out of ECL in 2012 with New Zealand Post buying their share. 127. Kenny, A., Beyond the Propaganda, Postal Deregulation in New Zealand, EPMU, Wellington, 2006 128. McArdle, I. CWU Ireland, (2012, 23 October). Personal communication.

36 UNI Global Union Workers in the private sector are organised by the National Federation of Freight, Logistics and Services Road Transportation Workers. Workers started joining the transport union when private postal companies began to arise.129 The picture isn’t entirely rosy though; unfortunately there are several companies operating illegally in the postal sector, which are not regulated or organised. One of the elements of success in Argentina was the culture of unionisation and strong collective agreements.

Sectoral collective agreement There is only one case of a single collective agreement for the postal sector and that exists in Sweden, a country with a strong tradition of social partnership and labour legislation. The tradition of social dialogue and the strength of the trade unions helped achieve one single sectoral collective agreement for all postal companies in 2011.

This didn’t happen overnight. The process started in 1991 when SEKO negotiated a first collective agreement with Bring Citymail. One key aspect of this process was cooperation and coordination between trade unions in the sector.

Organising can be a difficult task for traditional postal unions because some are not legally mandated to organise in the new operators or the new operators use precarious forms of labour such as self-employed, agency or part-time workers. However, postal trade unions need to find successful strategies to organise workers in the new competitors. Unions will have to change the way they operate through:

●● Shifting toward an organising culture rather than only servicing current members;

●● Developing the capacity of union leaders to lead strategic organising campaigns;

●● Devoting extensive financial and human resources to organising; and

●● Developing innovative strategies to reach workers in precarious forms of work.

These changes are not easy, however, in a liberalised postal market, organising workers in competitor companies becomes an ever more important strategy in the struggle for decent jobs in the postal sector and maintaining the rights and benefits for traditional postal workers.

Strengthening innovation and universal service

One way to minimise the impact of or possibility of postal liberalisation is to expand universal services and strengthen innovation. Expanding universal services can mean improving the access of rural and/or marginalised communities to postal services and through innovation, expanding the types of services being offered through the post office. Brazil is one case that has gone against the trend toward liberalisation and service reductions. The post has developed innovative services and strengthened universal service requirements. This has had a positive impact on job creation.

The post office is still fully owned by the government, though it has corporatised, and there is still a monopoly in place. The company is supposed to be financially self-sufficient. At the same time, the post office is used by the government as a tool to facilitate social inclusion. Their profitable services subsidize the provision and expansion of the universal service obligation.

129. Manzanelli See Sidero Antonio (1997), Op. cit. Footnote 47, p. 73

Postal Liberalisation: The Issues, the Impact and Union Responses 37 Innovation In the 1980s, the Brazilian post office explored diversifying their products and services. Two of their attempts, the Banco Postal and Exporta Facil, were successful financially and in the goal of expanding social inclusion.130

The Banco Postal was started in 2000 through a partnership with Bradesco. In this partnership, the bank provides financial services through the postal network with part of the profit going to Correios, the Brazilian post office. Bradesco managed the postal bank for 10 years followed by Banco do Brasil, which successfully won the bid in 2011.

The Banco Postal operates in more than 6000 post offices; this covers 95 percent of the Brazilian territory. Fifty percent of all Banco Postal deposits are from people living in the poorest municipalities, which represent almost one-third of the Brazilian population.

Banco Postal also provides micro credit to Brazilian citizens. In cities with Banco Postal services, an average of 37 percent new firms were created per municipality. It is expected that Banco Postal will continue to expand into new areas of the country throughout the coming years.

Since Banco Postal launched, more than 12.4 million people have gained access to financial services and many poorer regions have gained tools for economic development through access to micro credit. Several studies have also show that this financial inclusion was a key factor of the growth of Brazil’s GDP.131

The Banco Postal was also very good for job creation. Before Banco Postal, 80,000 workers were employed in the post office whereas now there are 120,000.132 At the same time, FENTECT has been struggling to gain working conditions on par with bank workers and improve health and safety mechanisms in post offices where higher amounts of money are being handled.

Exporta Facil was another program initiated by the Brazilian post office to facilitate social inclusion. It effectively simplifies the process for exporting goods and trains and supports small business owners who are interested in exporting. The post office works as a broker in the export process for simple exports.133 Last year, this program facilitated the export of $170m USD worth of goods from Brazil.134

Expansion of the universal service obligation The Brazilian government introduced a new regulation on the Universal Service Obligation (USO) in 2011, which expands access to postal services in Brazil. The changes mean thousands more citizens will have access to postal services.

By the end of 2012, all 5565 cities in Brazil should have a post office. Today, the company has post offices in 5519 municipalities, which represent 99 percent of the Brazilian territory. Furthermore, by the end of 2015, all districts with populations over 500 inhabitants should be covered by the postal network. Currently, the company covers 64 percent of these localities.

130. Mello Mattos, A., Barbosa Junior, V. (2012, September 3). Personal interview. 131. Fonseca, Natalia. Financial inclusion through post offices in Brazil: FENTECT’s experience. May 2012 132. Filho, M.V. FENTECT, (2012, September 3). Personal interview. 133. Mattos, A., Barbosa, V. Correios International Department, (2012, September 3). Personal interview. 134. Post and Parcel. UPU urges governments to use mail to boost trade. October 1, 2012. http://postandparcel. info/50965/news/innovation/upu-urges-governments-to-use-mail-to-boost-trade/ 135. Fonseca, Natalia. Changes to the Universal Service Obligation of the Brazilian Post. 2012. 136. Filho, M.V. FENTECT, (2012, September 3). Personal interview.

38 UNI Global Union Distribution The changes also introduce postal delivery for houses, which are not officially registered. The postal service currently delivers to 82 percent of Brazilian houses, which are officially registered with the city. According to IBGE, 6 percent of the national population lived in “favelas” in 2010, areas characterized as precarious dwellings, with a lack of public infrastructure and without registration. This means that 11.4 million of Brazil’s 190 million population live in areas of non registered housing. Therefore, residents of favelas and non-registered housing areas will now be able to access delivery services.

Delivery Targets The new regulation also affects the delivery targets. Simple letters and post cards must arrive within five working days and non urgent orders must arrive within 10 working days. In addition, the company should achieve these delivery targets in 95 percent of all correspondence.135

With the expansion of the Banco Postal and the USO, 12,000 new workers are now being hired.136 Clearly promoting innovation and expanding services for the public helps postal workers maintain quality jobs.

Conclusion Many changes are occurring in the postal sector with the spread of postal liberalisation, declining mail volumes, technological change and environmental concerns. The combination of all these factors has created many challenges for postal workers and postal trade unions. Some trade unions are leading the way in creative and thoughtful responses to these struggles, including postal liberalisation. This last chapter has highlighted some of the important ways in which workers can mobilise for the continuation of a vital public service and quality postal jobs.

This report highlighted some of the changes that are occurring on the regulatory front, the impact of liberalisation on employment, working conditions and postal services as well as innovative ways in which trade unions can respond to these changes.

Unions can and should be at the forefront of the changes happening in the sector. Workers are well-placed to advocate for quality, accessible, and universal postal service and safe, protected and well-remunerated jobs in the postal sector.

Postal Liberalisation: The Issues, the Impact and Union Responses 39 UNI Global Union Avenue Reverdil 8-10 1260 Nyon Switzerland Tel. +41 22 365 21 00 Fax. +41 22 365 21 21 Email. [email protected]

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