Threatened strike action at Latvian post averted

At the end of July 2007, employees at the major state joint-stock postal company, Latvian Post, planned to take industrial action in demand of higher salaries. To avert the strike, the Ministry of Transport proposed increasing state funding for postal services in rural areas. The government has meanwhile put forward proposals for liberalising the country’s postal services.

On 25 July 2007, newspapers in Latvia broke the news that postal workers are preparing to take strike action in demand of a doubling of their salary levels.

Postal services in Latvia are provided by the state-owned joint-stock company Latvian Post (Latvijas Pasts, LP) – which has 7,000 employees and which accounts for 70% of press subscription services – along with a number of private companies. Despite its dominance, LP has faced considerable losses; this is largely attributed to the fact that it has to maintain about 700 small post offices, in addition to the relatively unprofitable subscription press delivery services which it operates. These losses have been incurred at the expense of the postal workers, as reflected by their low salaries and poor levels of work safety.

Limitations of postal reform

In an effort to improve postal services, reforms of the postal system were introduced a number of years ago. Within the framework of the reform programme, unprofitable post offices were closed and postal services were automated, thus expanding service zones and improving the safety of postal delivery workers. The closure of small post offices raised anxiety among postal workers, although there were no overt protests at the eventual job losses. Therefore, the warning of strike action put forward by postal workers in July 2007 in demand of higher salaries was unexpected.

Trade union supports workers’ demands

The postal workers’ demands have received the support of the representative trade union at LP and the industry’s main union – the Latvian Trade Union of Communication Workers (Latvijas Sakaru darbinieku arodbiedrība, LSAB). The Head of the LP union, Regīna Šmitmane, explained that the problem of salaries in the postal services had become so acute that postal workers wanted to opt for immediate strike action. At the beginning of 2007, the overall average gross salary at LP was about €213, while the average gross salary of postal delivery workers was equal to the minimum wage of €170. Even if the salary of postal delivery workers was doubled, it would still only reach 70% of the national average gross wage and 62% of the average salary in the public sector.

Government proposals

Press reports outlined the details of the postal workers’ salary demands, as well as evaluating the consequences of the proposed salary increase. The Director General of LP, Gints Škodovs, explained in an interview that if the delivery price for subscription press corresponded to the costs of delivery, the country’s subscribers would face an increase in subscription costs of between two and two-and-a-half times the existing price.

Therefore, the issue of increasing salaries was quickly reframed within the context of state assistance for unprofitable post offices and for subscription press delivery costs in rural areas. Initially, LP suggested establishing a foundation which would fund newspaper deliveries to rural areas with a low population density. During negotiations, Latvia’s Ministry of Transport (Latvijas Republikas Satiksmes Ministrija) proposed three development plans for LP, including the establishment of a ‘post bank’. The government for its part proposed liberalising the postal services market and privatising the state postal company, in line with developments at EU level (see EIRO comparative study).

Strike action averted

On 25 June 2007, employees at LP agreed on a plan for industrial action; however, the submission of the workers’ demands to the company was delayed and the announcement of industrial action, scheduled for 30 July, was not made. Instead, it was agreed that the administration of LP would draw up concrete proposals for increasing the salaries of postal delivery workers before 13 August; this deadline was subsequently postponed to 15 August.

The strike was averted when LSAB and the management of LP, supported by the promises of the transport ministry and the government, reached a compromise on 15 August. LP’s management promised to increase the wages of postal workers and to develop solutions, in the best way possible, to some of the problems relating to working conditions. Meanwhile, the government supported the proposals of the transport ministry to improve funding for the financing of postal activities. Such proposals include establishing a post bank, increasing the delivery price of periodicals, and optimising the postal system. However, LSAB rejected the notion that optimisation of the postal system and an increase in wages would be achieved by reducing the number of postal worker jobs.

Commentary

It is clear that the dissatisfaction of the postal workers will be channelled to help achieve an improvement in funding for LP. On 23 July 2007, the Ministry of Transport – which holds the state capital shares of LP – had already established a working group whose remit is to develop proposals for improving funding for the postal system before 1 March 2008. No doubt, the threat of industrial action and the public’s dissatisfaction with increased postal service prices will contribute to a more favourable decision being taken in relation to LP. At the same time, the support of the trade unions is also likely to aid the development of such events.

Raita Karnite, Institute of Economics, Latvian Academy of Sciences

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