Pat Gallagher (Donegal South West, Fianna Fail)

I apologise to Deputy Eamon Ryan and the Members present on behalf of the Minister, Deputy Noel Dempsey, who is unable to be here. I will respond on his behalf to this matter and I thank the Deputy for raising it.

The Minister and the Government are fully committed to An Post remaining a strong player in the Irish postal market and recognise the invaluable contribution made by An Post and its staff down through the years, both in terms of their input to the overall business environment and the role played by both rural post offices and postmen and postwomen in maintaining the social fabric of rural society.

However, in order to be strong, the company must be financially viable. As the Minister stated previously in the House, the reality is that the company has suffered significant losses in recent years starting with €6.7 million in 2001, rising to €17.4 million in 2002 and then reaching an unsustainable level of €42.9 million in 2003. This sort of financial performance, if allowed to continue unchecked, would have bankrupted the company. The reality is that the company needs to introduce modern work practices if it is to thrive in a competitive environment. An Post will face more rather than less competition in coming years and it needs to be geared to address this challenge.

I take this opportunity to set out the lengthy background to the current industrial relations situation at An Post and to impress upon Deputies that this situation has not arisen over night. An Post has been through one of the most intensive industrial relations processes imaginable. This process started when, following the disclosure of serious losses for 2003, the Government asked the board and management of An Post to prepare a recovery strategy in order to return to financial solvency. The plan involved changes in work practices and voluntary job losses and was presented to the An Post unions in late 2003.

Around the same time, in recognition of the dire financial situation facing the company, An Post invoked the inability to pay clause under Sustaining Progress. This was followed by industrial action in the Dublin mail centre in March 2004. The Labour Relations Commission brokered settlement proposals, which involved negotiations on collection and delivery and in the event of non-agreement in the LRC, referral to the Labour Court.

Both parties spent from April to November 2004 in the LRC. The proposals arising out of the LRC were put to members of the CWU and turned down. The outstanding issues were then referred to the Labour Court for resolution. On foot of union concerns that An Post management had no real experience of the postal sector, the Labour Court appointed a three-person expert group to come up with a workable proposal on collection and delivery that would be acceptable to members of the CWU. This group spent six months working on a comprehensive proposal on this area which was published in July 2005. In early 2005, the An Post group of unions referred the non-payment of Sustaining Progress to the Labour Relations Commission as provided for under the Sustaining Progress agreement. The LRC appointed assessors to examine the claim. The assessor's report recommended that, having regard to An Post financials, 5% should be paid to employees backdated to 1 January this year. This recommendation was accepted by An Post management and rejected by CWU. Having received the report of the three-person expert group, the Labour Court issued a comprehensive recommendation which outlined that the acceptance of the deal on collection and delivery would trigger payment of the bulk of Sustaining Progress.

The Labour Court recommendation was considered by the executive of the CWU but was not put to a ballot of members. Instead the union decided to ballot for strike action on the non-payment of Sustaining Progress. The membership has voted for strike action and the union has given two weeks' strike notice. It is not clear at this stage what type of action this will be. As the Taoiseach and Minister, Deputy Noel Dempsey, have both outlined, the way to resolve the industrial relations issues in An Post is to engage on the basis of the Labour Court recommendation. This is necessary to bring about the essential modernisation of the company which is the best way of securing long term sustainable jobs for An Post workers and ensuring the continuation of a high quality nationwide postal delivery and post office service.

There is no doubt the decision by the CWU to take industrial action will impact on both personal and business customers. An Post is preparing contingency and communications plans to deal with the forthcoming industrial action which will address, in particular, the needs of social welfare recipients and provide information to customers regarding postal services.

On the liberalisation question, the competitive pressure on An Post is not in the future but in the here and now. Large international companies such as Royal Mail and the German post office already operate in the Irish market. If An Post cannot meet consumer needs and deliver a high quality of service, these companies will be more than happy to ramp up their operations here to fill the gap.

Time is not on the side of An Post and its workers. Some member states such as Finland and Sweden have already fully liberalised their postal markets and others are in the process of doing so. The momentum for liberalisation already exists. If An Post does not start to restructure, it will not be in a position to meet the competitive challenges of a fully liberalised postal market, and that is why the company's modernisation must start now.

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