Canada Post offers fresh union deal to cut labour costs

More than a year after Canada’s government ordered striking postal workers back to work and more than 20 months of union negotiations with Canada Post, a full labour deal for 48,000 staff is still not agreed. Canada Post and the Canadian Union of Postal Workers (CUPW) are in court today for a hearing into whether government-appointed arbitrator Guy Dufort should be allowed to settle the long-running dispute over a new work contract.

The contract would apply to about 48,000 CUPW members employed in Canada Post’s urban and suburban operations.

Dufort is the second person to be appointed to arbitrate the contract, with the first resigning back in November after union pressure over his lack of French language skills. The union took court action over Dufort’s appointment because of his past links to Canada’s ruling Conservative Party.

Canada Post told Post&Parcel today that it cannot afford to wait for the arbitration process to be completed – it needs cost savings from its workforce now. Its labour costs rose by $178m in 2011, the first year for 16 years when the company made a loss.

The Corporation submitted a fresh contract offer to the CUPW on Thursday (19 July), stating that previous offers were no longer enough given the changes in the company’s financial situation over the past 12 months.

Jacque Côté, the group president of the Physical Delivery Network wrote to employees to warn: “We find ourselves in a deeper financial situation than when negotiations began in 2010. We have always said, if we don’t deal with difficult issues in a timely manner, the choices will get tougher.”

The new offer makes changes to future and existing employee pension and benefit arrangements, changing pensions from defined benefit to defined contribution systems for new workers, and raising the retirement age for workers from 55 to 60.

Over the past year, Canada Post’s pension solvency deficit increased from the equivalent of $54,000 per active employee to $80,000 per active employee.

Lettermail volumes so far in 2012 have averaged about 1.4m fewer pieces per day than in the same period in 2011, while direct mail volumes have fallen by about 1.6m items per day.

CUPW national president Denis Lemelin said on Thursday that the union’s negotiations committee and National Executive were reviewing the new Canada Post offer.


“We needed to put an offer forward that was reflects our current reality, not the reality 12 months ago”

Canada Post has been negotiating with the union over the new deal since October 2010.

CUPW called a series of rotating one-day strikes in early June 2011 after months of negotiations failed to agree a new labour deal. Canada Post responded to the strikes by shutting its network nationwide, which then required government legislation to reopen at the end of the month.

Canada Post said today that wage increases for the CUPW workers were put in place under the back-to-work legislation, but that other labour cost savings needed by Canada Post have not materialised because of the lack of agreement with CUPW.

Jon Hamilton, spokesman for Canada Post, said the back-to-work legislation laid by the government at the end of June 2011 does allow the Corporation and union to reach agreement on a collective bargaining agreement outside the arbitration process.

“We can’t wait any longer. The state of the business is more dire than it was a year ago,” said Hamilton.

“Savings in our labour costs, which represent 71% of all our spending, haven’t materialised while at the same time the decline in letter mail and direct mail that we’ve been seeing over several years is really starting to accelerate in 2012. So we needed to put an offer forward that was reflects our current reality, not the reality 12 months ago, because it’s completely changed.”

New offer

Hamilton said that the new offer for CUPW was in line with conditions for other employees and management within Canada Post.

He said compared to past offers, the new deal maintains existing job security pledges for existing workers, offering job security for new employees after five years of service.

Regarding changes to pensions, Hamilton said: “There’s no changes to employee contributions, it’s really about years of service and making changes to early retirement – right now it’s 55 years with 30 years of eligible service, with the new offer it would be 60 with 30 years of service.”

The Canada Post spokesman said the average retirement age at the company was currently 58, but he said that the new arrangements would not necessarily mean employees being required to work an extra five years.

New employees from next year would have a defined contribution pension plan under the new offer, with a 3% contribution by Canada Post, with an option to increase that to 6%.

Elsewhere, proposals on sick leave reforms remain similar to past offers, but for post-retirement healthcare benefits for workers retiring from next year, a new plan will be introduced.

Hamilton said the new plan will still see Canada Post contributing, but any increases in premiums going forward would be the responsibility of employees.

If arbitration ultimately goes ahead, the Canada Post spokesman said the company could put forward a new position as a basis of the process, which would be more likely to be along the lines of the latest global offer than past offers, Hamilton said.

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