Springer puts postal division up for sale (Germany)

Axel Springer put Pin Group, its domestic logistics subsidiary, for sale after the Berlin parliament passed a controversial minimum wage bill for the postal sector which the company claims will make it impossible to compete.

Springer, which publishes Germany’s leading tabloid newspaper Bild , said it was withholding additional funding to Pin and was prepared to sell its 64 per cent stake in the company, after the lower house of parliament adopted the minimum wage bill by an overwhelming majority of 84 per cent.

Springer said minimum wages made the cost of competing with Deutsche Post “too high”.

“Deutsche Post has a double cost advantage, resulting in the monopoly being stronger through the introduction of the minimum wage than before the decision to privatise,” Springer said.

Yet, while two of the three opposition parties in parliament supported the text, 19 MPs from chancellor Angela Merkel’s Christian Democratic Union rejected the bill, which introduces hourly minimum wages of EUR 9 in east Germany and EUR 9.80 in west Germany.

The CDU’s grudging endorsement of the measure reflects deep misgivings in the party, where many fear it will damp competition in the postal sector and, as evidenced by Pin’s recent layoffs, destroy jobs.

Pin said the company’s senior management led by Gunther Thiel, chief executive, was prepared to buy Springer’s stake and inject a high double-digit million euro figure into the business. Pin declined to comment on German press reports suggesting it had agreed to buy the stake for a symbolic EUR 1.

Springer this summer paid EUR 510m (EUR 735m) for a 48 per cent stake in Pin in anticipation of the German postal market’s full liberalisation on January 1 2008. It owns 64 per cent of Pin.

Pin, which employs more than 9,000 and pays staff between EUR 7.50 and EUR 8.20, said it would look at additional job cuts to the 1,000 announced two weeks ago.

A spokesman for Deutsche Post said the agreement “does not mark the end of competition in the German postal market. We still pay 80 per cent of our delivery staff an average hourly wage of EUR 16.63, significantly above the new minimum rate.”