Dempsey threatens to remove An Post's monopoly

The Government is threatening to remove the final part of An Post's letter post monopoly if the Communications Workers' Union (CWU) goes ahead with industrial action at the troubled State company.

With a ballot already underway for strike action that is likely to disrupt the mail in the busy pre-Christmas period, Government sources said that the Minister for Communications Noel Dempsey was minded to remove the monopoly immediately instead of waiting until an EU directive takes force in 2009.

Such an action would cause severe commercial difficulties for An Post in the long run, as it would free the hand of rival private sector companies to introduce their own mail services in big urban areas.

Despite the difficulties that such action would prompt for An Post, Government sources said the Minister believes that no alternative course is open to him as any intervention in the company's industrial relations process would be in breach of social partnership.

Mr Dempsey implied as much in an interview on Wednesday when he said he would have to examine "alternatives" if the postal service closes down or if An Post found itself in a loss-making situation.

"The alternatives are that, instead of waiting until 2009, we say to people we're liberalising the market, we're allowing other businesses to come into this country to compete for the postal business, particularly the letter post," he said.

The Government sources said that such a manoeuvre would require the support of ComReg, which regulates the postal market.

However, they said that such a change could easily be executed within a year. With a daily absenteeism rate of 12 per cent common in some sections of An Post, the deteriorating industrial relations in the company are already causing delays in the delivery of letters.

A number of Ministers are anxious to see An Post put its house in order because they are coming under pressure from their own constituents about the poor quality of the postal service in certain areas.

The CWU is balloting staff over what it has described as the company's failure to honour pay increases under the Sustaining Progress agreement. The company has said that it will pay the increases, but only if staff agree work practice changes designed to deliver €60 million in annual cost savings for the company.

This is in accordance with a Labour Court ruling rejected by workers, but one which the Government feels it cannot circumvent.

An Post currently has a monopoly on the delivery of letter post weighing more than 100 grammes. This will reduce to 50 grammes next January under the terms of the EU directive that will open the entire market from 2009.

Private companies already operate in the market for parcels delivery and letters weighing more than 100 grammes with services that largely cater to the commercial sector. The completion of market liberalisation would clear the way for the same companies to introduce their own letter post services for the mass market as soon as they put systems and staff in place.

Such companies would have lower costs than An Post and it would be open to them to sort post in their own depots for delivery by An Post staff.

The CWU ballot will conclude next Friday. The union is likely to give seven days' notice to An Post before any action will be taken.

While Government sources do not believe there will be an all-out strike, disruptive action could have a severe impact on the delivery of mail and cause long backlogs.