Brian Lenihan Jnr (Dublin West, Fianna Fail)

I am replying on behalf of the Minister for Communications, Marine and Natural Resources, Deputy Noel Dempsey.

It would be useful to set out the background to the current difficulties being experienced following the decision of the board of An Post to close the company's parcels subsidiary, the special delivery service, SDS, and to reintegrate the parcels business back into the main company. There have been heavy losses in recent years at SDS. These losses amounted to €18 million over a three year period to 2003, with losses of €12 million in 2003 alone. Further heavy losses will be sustained in 2004. In these circumstances, the board of An Post, at its July meeting, decided to close SDS and to reintegrate the parcels business into the letter post division.

A total of 180 SDS jobs will be reintegrated into letter post operations and an entirely voluntary redundancy package will be introduced for an anticipated 270 job losses. The redundancy package will be funded by SDS property disposals.

It is my understanding that, following a request from ICTU, the national implementation body held a hearing to determine whether the company breached the partnership terms of Sustaining Progress in making its decision to reintegrate SDS. The national implementation body, as part of its determination, proposed that an independent facilitator be appointed to institute a process for information sharing, including financial details. Mr. Peter Cassells has been appointed as the facilitator and the process has been up and running for some time.

Following recent industrial unrest at SDS in the run-up to the planned closure and in a renewed effort to resolve the issues surrounding that closure in as fair and transparent a manner as possible, the matter will come before the Labour Court on 11 February. Critically, both sides have agreed to be bound by the court's recommendation. In the meantime, the closure of SDS has been delayed for a short period to give the court the space and time to examine carefully the issues arising, with due regard to the interests of all parties.

Turning to the wider picture in the postal services, the issues of the payment of Sustaining Progress increases to An Post employees, together with the agreement and implementation of the recovery strategy for the company, have also been referred to the Labour Court for arbitration. These issues will come to the court on 7 February.

The company has pleaded "inability to pay" Sustaining Progress increases following heavy losses amounting to €43 million in 2003. This is an ongoing matter of dispute between union and management and no easy solution presents itself in view of the critical financial state of An Post. On the recovery strategy issue, the Labour Relations Commission has been involved in exhaustive discussion with management and unions throughout 2004. Despite some progress, agreement has not been reached between the parties on all the details of a viable and effective recovery plan for the company.

It is essential that both sides continue to work together in conjunction with the State's industrial relations machinery to broker a deal that will allow the company to deliver quality services to our citizens while at the same time offering good well paid employment to its employees. I urge both parties to negotiate in partnership to achieve the necessary agreement that will enable An Post to meet the challenges facing the postal sector in the months and years ahead.

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