An Post- Will Liberalisation Cost Jobs?

[TrueBlueTerrier]

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Will Liberalisation Cost Jobs?
Yes is the short answer to this question. We know that liberalisation leads to job losses and we also know, from examining what has happened in other countries which have opened their postal markets to competition, that not only are jobs lost but any new jobs that are created tend to be poorly paid, precarious, and temporary. In effect this is a form of social dumping.

There are various studies that have been done to bear out these facts (to read what has happened in other countries click here). Most recently Union Network International (UNI) conducted a study which has found that in Germany, Deutsche Post cut more than 21,000 full-time and more than 12,000 part-time jobs between 1999 and 2006. In the Netherlands, the number of full-time equivalent (FTE) jobs has dropped from 40,000 to as few as 24,000.

An Post itself is already reducing its staff numbers by 1,400, this is partly to do with the current challenging economic environment, but also to do with the fact that it is preparing for liberalisation.

At a time when we should be creating employment the Government is preparing legislation that could wreak havoc in the postal sector, which employs around 10,000 people in An Post alone.

The European Commission promised that postal liberalisation would create more and better jobs, but instead it has created an environment where the race to the bottom is becoming the norm. Companies compete on price which means whoever pays the lowest rate of pay will win. We were told that this would not happen, that companies would compete by innovating and creating new products. Instead a vital public service is being eroded by brutal competition, job losses, and short sighted regulation.

Role of the Regulator
A key role for the Regulator in respect of other operators in the universal service area after liberalisation will be to ensure that fair competition exists on a level playing pitch and this extends to aspects of the service outside of price and quality of service.
This should include dealing with aspects of liberalisation that will ensure there is no race to the bottom in terms of employment conditions. The experience of other Member States with more liberalised postal markets would suggest that price competition has an adverse effect on employment conditions and it should be noted that Recital 16 of the Directive states that "social considerations should be taken into due account when preparing the opening up of the postal market".

This could be dealt with as part of a revised licensing and authorisation process that compels operators to make appropriate provision for national pay awards, pension schemes, a decent standard of terms and conditions, general adherence to social policy, and industrial relations best practice up to and including a right to collective bargaining. Social dumping is a real threat in the liberalisation process and it is vital that appropriate protections be included in any legislation to protect the employment standards in the industry.

In addition, a revised licensing scheme can ensure compliance with all other aspects of commercial and company law to protect the emerging market from predatory companies who might be content to exploit the opportunities of this change to the detriment of the service itself. For example, security and criminal checks on those involved in the new operations, as well as appropriate vetting procedures for their staff.

Downstream Access
The independent review of the UK experience has found that, in its postal market with significantly higher volumes than Ireland, there is little prospect of a genuine end-to-end service emerging two years after liberalisation. A number of trials in specific, high density urban areas have been mooted, but nothing akin to the six day service provided by Royal Mail. As such it is very likely that, like the UK where much of the competition has taken place in the downstream access sector, the Irish market will be subject to the same activity. This has been suggested in the recent LECG report which stated that there is some indication that operators are considering options to enter universal service market but only after liberalisation and only in niche markets.

What is vital is that we learn from the mistakes made in the UK and do not choke the existing network of the mail volumes to ensure everyone has access to a properly resourced and functioning delivery network. In the absence of end-to-end competition, a healthy and properly resourced An Post network is central and indeed critical to the evolution of the postal market. To ensure that this is not undermined it is vital that any access model that is arrived at supports this principle.

The experience in the UK has seen considerable 'upstream' competition, more than anyone had previously predicted. The result of this competition however has not delivered anything like positive results for all postal users. The winners have clearly been big business and bulk mailers. The independent report has found that "there have been no significant benefits from liberalisation for smaller businesses and domestic consumers". In addition to this it found "that more extensive competition could make the universal service unsustainable".

An Post has invested heavily in the automation of the four mail centres and to allow access beyond these entry points will serve only to render the investment null and void (a serious disincentive to future investment in itself) and guarantee that the necessary volumes needed to make the network run will not be there. Access elsewhere in the network will, in effect, turn the logic and design of the physical network on its head and force An Post to redistribute its resources in a manner that will eradicate any savings that have been made in the past and increase costs in the future.

Low levels of inputs to the mail centres will trigger a downward spiral where a lack of volumes leads to lack of investment and cutbacks which will undermine the service and choke the network, which is ultimately bad for the service and will hurt everyone that needs to access an efficient and effective delivery network. It has been noted by the Regulator in the past that volume is key to unit costs and competitive success. Regulatory certainty is needed to ensure that continued investment can be made in a network that will ensure the long term future of the service.

In the UK report it is noted that 60% of the costs are in the final mile and it is not acceptable that new entrants could simply rely on An Post to handle this burden on terms that have been imposed on them, which have been designed only to suit competitors. Therefore, An Post should be free to negotiate the terms and conditions of network access with its customers and competitors, based on equal terms and in line with the principles laid down in the Directive.

[ziko]

In other words even if mail volumes were up through DSA, Her majesty's mail would just be quite literaly carrying more of the cost/loss on her shoulders..

[fishtank]

In other words even if mail volumes were up through DSA, Her majesty's mail would just be quite literaly carrying more of the cost/loss on her shoulders..

Exactly....mail volumes decrease we lose money...DSA increases we lose even more money...the game is as bent as a nine bob note.

[BELIAL]