Strikes accompany difficult restructuring at La Poste

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France's state-run La Poste postal services group has been restructuring its various departments since the second quarter of 2003, with particular emphasis on its banking and mail operations. The process has been accompanied by outbreaks of industrial action, most recently in May 2004, with unions concerned about job losses and deteriorating conditions of employment. At the same time, parliament has been considering changes to La Poste’s legal status in order to bring it into compliance with EU regulations.

In October 2003, the Court of Auditors (Cour des Comptes), the body responsible for monitoring government and state-run companies, published a report on La Poste, the post office and postal services group. It found that all of the company’s operations are rather uncompetitive and overstaffed, thus making it impossible for it to compete with its European equivalents (Les comptes et la gestion de La Poste (1991-2002)[The financial situation and management of La Poste (1991-2002)], Court of Auditors, Paris October 2003). The report stated that the company’s network of 3,000 main post offices and 14,000 sub-post offices or counters is far too large and that the size of the workforce (approximately 325,000 employees) is a burden. In the view of the Court of Auditors, 'neither the company’s results, the balance between its various operations nor quality of service put it in a good position to compete'.

Government-La Poste agreement 2003-7

On 20 October 2003, the Minister of Industry, Nicole Fontaine, announced the broad outlines of the 2003-7 agreement between the government and La Poste. The new agreement is designed to enable the state-run company to meet the challenges arising from the planned introduction of competition between 2006 (in the market for letters weighing over 50 grammes) and 2009.

In July 2003, the government drafted a bill on the regulation of postal services in preparation for the implementation of European Union rules - in particular, this involved the transposition into French law of a May 2002 EU Directive on postal services. This bill, which has been under discussion in parliament since late April 2004, provides for an extension of the jurisdiction of the Telecoms Regulation Authority (Autorité de régulation des télécoms, ART), allowing it to assume responsibility for regulating the postal sector. The body is thus in future to be known as the ARTP.

The 2003-7 agreement, which takes into account these changes, allows La Poste to offer a slightly wider range of financial services and to modernise the mail service, particularly its sorting operations, while retaining a nationwide network of post office branches in one shape or another equal to the current 17,000 post office outlets. La Poste managers have stressed that no post offices will be closed but that resources will be redeployed to allow for new branches to be opened in poorly served suburbs and for rural post offices to be transformed into 'community' branches or counters.

As for La Poste’s pension liabilities (approximately EUR 2 billion per year), the government will initially continue to cover part of the annual total pension bill, as it has done since 1997. The new deal provides for the creation - but not the practical details - of a new arrangement, starting in 2005, to fund pensions for the 140,000 La Poste employees slated to retire by 2012.

Lastly, the state has traditionally provided indirect support for the press through a whole range of free-post and preferential postage rate schemes. The 2003-7 plan does not specify the financial compensation that the state will provide to La Poste for this service.

Development and restructuring of financial services

After months of difficult negotiations, in particular with the banking sector, the new 2003-7 agreement provides for the extension of the financial services provided by the state-owned La Poste, by creating a new wholly-owned La Poste ad hoc subsidiary. Apparently, strong lobbying by the main banks and financial institutions has led to this expansion being restricted in 2005 to those mortgages that do not require people to have special home-buyer savings accounts entitling them to property loans. Some La Poste managers and politicians have indicated that La Poste might provide consumer goods credit, starting in 2006.

Against the backdrop of this expansion, in March 2004 the managers of the financial services arm of La Poste unveiled a plan to trade unions to cut 2,800 of the current 17,300 full-time positions in financial centres between 2004 and 2007. However, no centres are to close. This target is to be met through scheduled retirements. According to management, La Poste’s financial centres are 30% less productive than competitor banks. In addition to the reduction in the number of jobs, management wants to increase productivity in financial services through an internal reorganisation of various departments and to develop sales by improving the quality of service provided to customers.

Restructuring mail operations

Mail operations currently make up approximately 60% of La Poste’s total business. Management is keen to improve mail services in order to ensure next-day delivery for 80% of letters and parcels by the end of 2004. This would be an improvement on the current situation, which saw La Poste managing to deliver only 64.1% of mail the next day during the first nine months of 2003.

In order to achieve this goal, the whole mail-processing chain is to be reviewed. The management hierarchy has already been made more flexible by reducing it from five to three tiers. La Poste now plans to centralise sorting services close to the locations of its largest customers (banks, insurance companies, mail-order companies, mail advertising companies etc), which make up between 20% and 30% of its mail-related turnover. These customers are likely to be major targets for competitors when the market is opened up. Accompanying this strategy is a major initiative to invest around EUR 3.4 billion by 2010 to improve mechanisation and automatisation in the sorting process. The goal is to bring the current level of mechanisation from 60% up to 90%. Centralising sorting offices into national, regional or local centres will significantly alter the existing network of département-level sorting centres, some of which are to be closed.

Industrial action and reaction

From summer 2003, trade unions publicly criticised what they saw as a low level of consultation on the definition and details of the implementation of the 2003-7 agreement between the state and La Poste. Union concern expressed when the agreement was made public dealt mainly with the dangers of job cuts and of working conditions worsening as management strives to improve productivity, and with the legal status of La Poste. Most new La Poste employees are no longer hired as civil servants but as private law workers.

The implementation of the state-La Poste agreement on an operation-by-operation basis has led to a series of periods of grassroots-driven industrial action in sorting offices and the financial services branch. Most recently, on 13 May 2004 strike action began in sorting offices at the behest of the General Confederation of Labour (Confédération générale du travail, CGT), the General Confederation of Labour-Force Ouvrière (Confédération générale du travail-Force Ouvrière, CGT-FO), and Solidarity, Unity nd Democracy (Solidaires, unitaires et démocratiques, SUD).

Politicians in rural areas - directly affected by the transformation or even closure of post office branches - are closely monitoring the future of the national network of post office branches with the help of the powerful associations that represent them. They expressed their disapproval of the planned changes following an announcement by the chair of the National Assembly's Economic Affairs Committee, Patrick Ollier, of the closure of over 900 post office branches.

Commentary

Originally an integral part of the state’s administrative machine, the La Poste group is currently restructuring its various business operations in order to meet the challenge of the introduction of competition into the postal market. This process is a difficult one for the following reasons:

  • action by employees and their trade unions is designed to protect their vested interests, which for some means rejecting the changes now under way;
  • the government has allocated few resources to support the modernisation of La Poste facilities, which have suffered from years of neglect; and
  • private companies - particularly those in the banking sector - are keen to take the sting out of competition from a new player in their traditional area of business.

(Maurice Braud, IRES)

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