Dispute over outsourcing of postal services

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In April 2000, the Finnish postal service, Finland Post, decided to close some of its branches and transfer their activities to subcontractors, with the loss of 1,500 jobs. Trade unions have opposed the plan by organising a one-day strike and by contacting politicians, though without being able to prevent the closures.

In April 2000, the Finnish postal service, Finland Post (Suomen Posti), decided to transfer the work of 250 unprofitable branch offices to local businesses already providing some other service (eg shops). According to Finland Post, this change will keep the number of outlets at present levels. There are some 1,500 post offices in Finland, of which nearly 1,000 are run by private service businesses.

The restructuring is connected with the end of cooperation between the Leonia banking company (formerly the Postbank, prior to becoming a separate company) and Finland Post, to take effect during 2000. Leonia has been a significant employer in many post office branches. With the disappearance of this work from post office branches, it will be easier on grounds of expediency - according to Finland Post - for some postal services to be handled by other service companies with more custom, such as shops. The change is justified on the grounds that the cooperation with other businesses will guarantee adequate opening hours for postal services, and that the services will also be provided during the weekends. Further, Finland Post claims that the linking of local postal services to local businesses will, in turn, help to guarantee and improve those services. Finland Post is a completely state-owned company, and politicians make up the majority on its administrative council.

Staff reject the plan

The final estimate of the decrease in workload resulting from these changes is still not fully decided, and a cooperation procedure dealing with the effects on the staff is still under way. Overall, some 3,000 employees currently work in post office branches, and the decrease in work would mean a loss of 1,500 jobs. For some of the employees concerned, it will be possible to offer a job elsewhere in the Finland Post group of companies, which has 25,000 employees in all. According to Finland Post, individual employment plans will be finalised during summer 2000. The chances of employees finding a new job within the group will depend, among other factors, on their willingness to accept working in a different location and with a different job description. Those who cannot be found such jobs will be supported in seeking work outside the Finland Post group, and they will be offered various individual support option, with attention paid to their "ability to cope".

The trade unions represented at Finland Post, the Union of Post Office Employees (Postin Toimihenkilöliitto, PVL) and the Finnish Postal Workers' Union (Postiliitto), have expressed their irritation at what they see as the management downplaying the skills of the personnel. According to the unions, postal services cannot be improved by transferring them to subcontractors. In their view, Finland Post should improve its activities by utilising the present network. The unions also do not see the workforce cuts as being necessary on the grounds of the development in financial results alone. Furthermore, they find it strange that the state has several current programmes (such as the programme for older workers - FI9708125F) that are aimed at keeping larger numbers of people in working life, while at the same time it is cutting the workforce of state companies, thus setting a bad example for others.

Trade union members working in Finland Post's customer services took strike action on 13 April 2000 in protest against the post office closures. After the one-day stoppage, work continued as normal. In addition, the unions have maintained contact with politicians. However, these efforts have not influenced the closures.

Threat to postal services in outlying areas?

Trade unions fear that outlying areas will now be left without good postal services. The present plan entails Finland Post finding 250 new private agents in order to maintain the current level of 1,500 service points. The unions doubt that this will succeed, because the general trend in the rural areas is that services generally are diminishing, and this will reduce the number of potential entrepreneurs who might be able to take on postal services.

The unions consider that the rationalisation of the post office branch network would have severe effects on Finland's basic infrastructure. They believe that the branch network currently contains sufficient know-how to offer and sell all-round postal, bank and insurance services, and that it would thus be reasonable to make further use of these human resources, new computer techniques and the network of Finland Post branches covering the whole of Finland, in order to serve companies and private customers. The network of Post Office branches has been rationalised twice already in the 1990s; on these occasions, the remaining personnel were given an assurance that, by committing themselves to the goals of Finland Post, they could retain their jobs. According to a letter from a staff delegation to the Minister of Finance): "The post office clerks feel that they have been cheated. They are appealing to the employer's moral obligation to take care of its employees in accordance with its promises, because ... the clerks have functioned just as the employer has required."

According to Finland Post, it will continue to deliver postal services in future, using its own facilities and its own personnel, in locations where its branches are busy. There are over 300 such branches. Postal deliveries and transportation will not be affected by the current changes.

Commentary

Following the economic depression of the early 1990s, and since Finland joined the European Union, its public services have been heavily privatised. Numerous state-owned firms have been converted into companies and sold off. The reorganisation of postal services shows that "business thinking" is now starting to affect the basic services of society. Finland Post has been profitable, but, according to the company, there are not sufficient grounds for unprofitable offices to be maintained through the use of other revenues.

The policy of cooperation with subcontractors presents a clear risk that postal services in rural areas will be weakened if they are not cost-effective. This is all the more likely because maintenance of postal services in country districts is expensive. The latest development will certainly lead to higher service charges though, on the other hand, the service hours and the facilities offered may be improved. A danger of the reform is that reducing the branch network might lead to an even greater marginalisation of rural areas.

Only time will tell how far the reform will succeed. In any event, many postal workers will lose their present jobs. Privatisation and subcontracting are not necessarily popular concepts when it comes to basic services with which Finnish people have been satisfied up until now - even if these services are partially unprofitable and provided using taxpayers' money. A good level of services and network coverage have been part of the "Nordic welfare model", which is thus being further undermined by this latest case. The debate on privatisation will certainly continue in Finland, and will also involve other public services. (Juha Hietanen, Ministry of Labour)