Pat Gallagher (Donegal South West, Fianna Fail)

I apologise on behalf of the Minister for Communications, Marine and Natural Resources, Deputy Noel Dempsey, who is unable to attend the House. It is important to recall the background to the current difficulties in An Post and the decision of the An Post board not to pay Sustaining Progress increases to staff and, subsequently, to An Post pensioners. In such circumstances, it is open to the unions to refer the matter to the Labour Relations Commission and, ultimately, the Labour Court where a binding ruling can be made.

The inability to pay claim was based on the fact that An Post sustained losses of €43 million in 2003. This precipitated a financial crisis in the company, especially as these losses came on top of operating losses of €17.4 million in 2002 and €6.7 million in 2001. The financial accounts and report for 2004 have not yet been finalised. However, it is expected that the company will be close to break even position. The improvement in 2004 against 2003 must be viewed in the context of savings made, including the non-payment of Sustaining Progress. The cost of Sustaining Progress in 2004 would have been €18 million. The cost of Sustaining Progress going forward would be €37 million in 2005 and €56 million in 2006.

Payroll and non-pay-related costs were reduced in 2004 against 2003 and this was brought about by vigorous cost control initiatives. However, the underlying problems which led to the financial crisis have not been solved and that is why the company and the unions are engaged in an intensive negotiation process under the auspices of the Labour Court. The real solution to the problems in An Post is for both parties to agree on a deal for a viable recovery plan. In this regard, a recovery plan was presented by the board and management which assumed significant changes in work practices, tariff increases and the payment of wage increases. Adoption of such a plan that delivers real change is the only way An Post workers can look forward to receiving pay increases in line with other sectors.

An Post pensioners have also unfortunately been affected by the financial problems of the company. The existing terms of the An Post superannuation scheme provide for pay parity, that is, that pensions are increased in line with the pay of serving staff. This is in accordance with public service defined benefit pension increase policy generally, pay parity being an integral and well-established practice which is widely used in public service defined benefit pension schemes.

In regard to SDS workers, the House will be aware that following substantial losses in recent years at the parcel delivery subsidiary, the board of An Post decided to close SDS and to reintegrate the parcels business into the letter post division. On 11 February last, the Labour Court conducted a hearing on outstanding issues in regard to SDS and met both parties again on 21 February to clarify their respective positions. The court is expected to issue a recommendation on certain key outstanding issues between the parties shortly.

The matter of the non-payment of Sustaining Progress increases to An Post employees was heard by the Labour Court on 7 February. The court recommended that the Labour Relations Commission appoint assessors to examine whether the company was correct to invoke the inability to pay clause in regard to Sustaining Progress. An Post has accepted this recommendation.

On the issue of the recovery plan, the Labour Court has also been active and has appointed a technical group to advise it on the complex issues arising. That group is to report back to the court by 6 May.

With intensive work under way in the Labour Court on several issues, including the non-payment of Sustaining Progress increases, I urge both unions and management to embrace this opportunity to reach agreement on change within 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 providing sustainable well paid employment to its staff. This is the challenge facing the board and management together with the unions and they should not allow themselves to be deflected from meeting that challenge.