La Poste reorganises as competition looms

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With the prospect of the full deregulation of postal services by 2009, La Poste, the French post office, has increased the pace of its overhaul process and is now endeavouring to reorganise. In early 2005, the employment implications of the planned shake-up of the post office branch network and its consequences in terms of rural development have sparked strong reaction from both trade unions and local elected officials.

By 2009, the monopoly of La Poste, the French post office, over letters above 50 grams will be removed, just as it was a few years ago over parcel services. The state-run entity is concerned about competition especially from its German and Dutch counterparts, whose restructuring initiatives are well ahead of those being undertaken by La Poste. As a result, La Poste has increased the pace of its transformation and reorganisation process.

Initiative challenged from the outset

As a first step, the La Poste’s management is endeavouring to streamline its network of branches. However, its initial plan was thwarted (FR0405105F). In late August 2004, it floated the idea that 6,000 of the network’s 17,000 branches would be slated for closure. The low population density in much of rural France together with a relatively dense network of post offices has meant that a fairly large percentage of branches are being under-used. Amongst, the 12,000 La Poste-owned 'full service branches', management has been planning to shut those branches serving very few customers and to convert those with higher, but nevertheless modest business volumes, into 'sub-post offices', located, for example, in town halls and retail outlets, and run by non-La Poste staff. La Poste argues that this will not lead to cuts in services, as shops usually have longer opening hours than post offices, thus providing better access to services.

Nevertheless, there has been a groundswell of protest at the moves, initially from the General Confederation of Labour (Confédération générale du travail, CGT), and Solidarity, Unity, Democracy (Solidaire, unitaire, démocratique, SUD) trade unions and later from even more vocal local elected representatives, particularly in rural areas (FR0410105F). With only a few weeks to go until Senate elections (involving indirect suffrage by local elected representatives, with those from rural areas having significant clout), the government decided to become actively involved. The chair of La Poste was forced to initiate talks with elected representatives (mayors and local council chairs) in order to move forward on the matter.

This political pressure has arguably been much more effective than a strike organised in September 2004 by the CGT, the General Confederation of Labour-Force ouvrière (Confédération générale du travail-Force ouvrière, CGT-FO), the National Federation of Independent Unions (Union nationale des syndicats autonomes, UNSA) and SUD (between 9% and 20% turn-out according to management and union figures respectively) in leading La Poste to put forward an alternative reorganisation plan.

New reorganisation plan

Under the new scheme, La Poste no longer intends to close the least profitable branches but instead to position itself as 'France’s largest network of local services providers'. The company plans to turn its branches into distribution centres, not only of its own products and services, but also of other client services, such as those provided by local authorities (selling swimming pool tickets, for instance) or the French National Railways (Société Nationale des Chemins de fer Français, SNCF). La Poste thus plans to make the sale of services through its branches one of its key business lines. Alongside mail and parcel distribution, these other services will no longer be managed by the same division as financial products.

La Poste’s new plan was made easier to develop since it is in line with a decision taken by the government in January 2005 allowing La Poste to expand its financial services and launch a bank similar to all other banks. Until now, the state-run company has not been allowed to provide loans to customers who did not have La Poste savings plans. To the great displeasure of the banking sector, which is already facing huge competition, a new bank is to be formed in July 2005. The new entity will have its own equity and will gradually be awarded the right to operate a full range of banking services.

Reaction

Trade unions have largely reacted favourably to the expansion of the range of services provided by branches as a way of consolidating the network. However, they have expressed concern over the creation of the 'La Poste bank', since, despite the government’s claims to the contrary, they fear that this might be the first step towards privatisation. They believe that one day the percentage of the new entity’s capital not owned by the state may be used to introduce privatisation through the back door. CGT, CGT-FO, the French Christian Workers’ Confederation (Confédération française des travailleurs chrétiens, CFTC) and SUD issued a strike call for 18 January 2005, the day on which parliament was to begin debating a set of postal regulations, involving the transposition of two EU Directives (Directive 97/67/EC on free competition in the distribution of mail over 50 grams and Directive 2002/21/EC on the creation of a regulatory body for the sector) and the reorganisation of La Poste.

For their part, members of parliament passed a bill stipulating that there must be no more than 10% of the population of any département living further than five kilometres from any one of the various types of post office branches. This means that La Poste is required to retain 14,000 'access points' (full or sub-post office branches).

While the new reorganisation initiative has dropped the original plans to close branches, there was approximately the same turnout for the strike on 18 January 2005 as in September 2004. La Poste management apparently wishes take into account the positions of the trade unions, which are relatively critical of the creation of a free-market system in the postal sector, and therefore keep a close watch over the way in which the government and La Poste management intend to overhaul the company. The results of elections of employee representatives to the joint committees in charge of career paths and promotions at La Poste, held on 19 October 2004, consolidated the positions of the unions that previously occupied the top three slots. CGT remained the best supported union, increasing its share of the vote slightly to approximately 35%, while the second largest and also the most 'militant' union, SUD ,boosted its score to 21%. The union in third place, CGT-FO (18.5%) gained one percentage point at the expense of CFDT (16.6%). The latter contends that it was able to stem the losses that it might have expected to suffer as a result of its 'reform-friendly' positions, which set it apart from the other unions, generally more critical in their stance or even, in the case of SUD, strongly opposed to the creation of a free-market system in the postal sector. CGT has a clear message on deregulation: the government 'must stand down on its stated goals'.

Commentary

La Poste is having to negotiate a difficult period as a result of deregulation of the postal sector. The legitimacy of this move remains a thorny issue. Letter carriers that have criticised the move to deregulation of the postal sector are sure to find politicians and members of the public that share their concerns. As the gains for ordinary customers do not seem as obvious as they were in the case of deregulation of the telecommunications industry, certain sections of the population might easily conclude that they have been left out in the cold by a move to give a market-oriented focus to the state-run company.

Given the depopulation of rural areas, which have significant symbolic influence in France, political representatives have been speaking out against the La Poste overhaul. As a result, the government and the management of La Poste have had, at least in their public statements, to tread carefully on the issue of deregulation, even though this may lead to developing strategies that are uncertain in their medium- or long-term economic viability, at the same time as the creation of the 'La Poste bank' is fuelling even greater competition in an already fiercely competitive banking industry. (Pascal Ughetto, IRES)

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