"Postcomm price controls to cost 10,000 jobs" say post managers
The Communication Managers Association section of Amicus, the union representing 14000 postal managers and professionals, today says in a submission that the price control proposals of postal services regulator Postcomm would threaten 10,000 jobs and strangle the company during its 3 year recovery period.
Key points in the union submission include:
– the proposals damage the renewal plan of the Royal Mail Group (RMG) agreed with government, could result in a further 10,000 redundancies and wreck the ‘Share-in-Success’ employee incentive scheme recently announced.
– Postcomm has failed to carry out a proper price review and failed to:
– Make projections of mail volumes and the impact of these future volumes on RMG’s costs – Consider historical measures of mail efficiency, for instance the relationship between mail volumes and costs – Benchmark RMG’s operations against other national postal operators – Benchmark RMG’s operations internally – Undertake detailed reviews of individual elements of RMG’s operations
– as a result Postcomm has failed to establish an adequate basis either for the form or level of its price control proposals
– the extremely optimistic view of the level of costs and volumes that RMG can be expected to achieve during the period of price control given that competition increases unit costs through loss of economies of scale.
– the proposal to apply an average price control to products whose prices range from under 19p to #3.65 fails to take account of the impact of competition, penalises RMG for success in marketing its higher priced products, and acts as a disincentive to new products and innovation.
– Postcomm should consider a formula for price control similar to that in the Netherlands based on average earnings rather than price inflation given the highly labour intensive nature of RMG operations.
2.1 Postcomm should reconsider its proposals, other than the price increase in April 2003 and continue the current interim price control for another year until 31 March 2004 As part of its reconsideration Postcomm should consider applying price control to a less varied basket of products, with only products outside the basket subject to individual price controls.
Peter Skyte, National Secretary of the Communication Managers Section of Amicus said:
“Whilst we welcome the proposed increase in stamp prices to give Royal Mail a financial breathing space, the price controls proposed will not merely squeeze but strangle the company during its 3 year recovery period. They can only lead to the prospect of further substantial job losses, act as a disincentive to innovation and imperil the future financial viability of the company.”
