Striking French postal workers fear privatization

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Thousands of post office workers across France went on strike on Tuesday to protest job cuts and government plans to convert the organization into a publicly owned limited company.

"This project is an additional step toward a privatization of the biggest local public service, contrary to declarations by the government and La Poste management," the hardline Sud-PTT union said in a statement.

The union said 35-40 percent of postal workers had joined the strike, which is being jointly coordinated by all five of France's main trade unions. La Poste said 21.15 percent of staff had joined the strike by mid-morning.

The government says the move is necessary both to open up access to new sources of funding and to prepare for the liberalization of the postal sector in 2011 under European Union rules and denies the move is a first step toward privatization.

"This is not a privatization. What we are planning is a reorganization of La Poste in order to strengthen it," Economy Minister Christine Lagarde told France Inter radio.

"We expect, under any hypothesis, that the shareholders will remain public," she added.

Under the plans, the government will provide a capital injection of 2.7 billion euros ($4 billion), directly and via state-owned bank Caisse des Depots (CDC), which La Poste says it needs to become more competitive.

La Poste, with its distinctive blue and yellow insignia, employs more than 250,000 people and is one of the best-loved and most recognizable institutions in France, making any change in status an extremely delicate proposition for the government.

It currently has the status of an "autonomous public operator" directly supervised by the industry minister.

The group said last year it was considering opening up its capital to private investors and asked to be allowed to change its status to that of a limited company to enable the move.

It had planned to raise 2.5-3 billion euros from selling shares before the plan was abandoned when the global financial crisis broke last year.

The decision to drop the sale plans left the group looking for replacement funding to allow it to compete with aggressive international rivals such as United Parcel Service or privatized German post office operator Deutsche Post.

"This magnificent institution needs capital in a context where the market is going to open up to competition given the European regulations," Lagarde said.

Unions discount government assurances that the new company would remain in public hands.

They point to past examples such as Electricite de France, Gaz de France and France Telecom, all of which have been partially or completely privatized despite earlier government declarations.