Around the world, many national postal services are having their monopoly status revoked on letter mail. Many academics see this type of deregulation as leading to a “downward spiral” for national postal services, as private sector competitors will be able to carve out just the profitable services—leaving the high-cost work to the public bodies. For instance, a delivery service may decide to only carry utility bills in New York City, taking away valuable business from the USPS. Of course, they would not consider extending their network throughout Alaska.
In addition, the private competitors will be able to adjust their prices to attract the lowest-cost deliveries, and add surcharges to the high-cost services—though the public postal systems would not be allowed such business flexibility.
Most privatization schemes go even further: allowing the private networks to collect and sort mail, then dumping it on the public postal system for delivery at severely reduced prices.
In essence, the public postal networks have always been granted monopoly status in exchange for universal service (which is costly) and uniform pricing. Under many of these new arrangements, private companies are allowed to compete without those restrictions, while the public systems continue to retain those responsibilities without the benefits given to private competitors.
Britain: Royal Mail
On January 1, 2006, Britain’s Royal Mail was deregulated. As time goes on, they will be forced to compete for all delivery services (including letter mail) against new private delivery services. In the past three years, one in eight pieces of bulk mail (or 2.5 billion pieces) has been diverted to competitors.
In order to deal with this problem, Royal Mail is asking the regulator (PostComm) to eliminate the one-price-goes-anywhere universal service requirement on business mail, so it can fairly compete with private service providers. In addition, the cross-subsidy on stamped mail may end in order to drive down costs on the business mail segment that is being challenged.
For more about the U.K. mail market go here.
In October 2005, the Japanese government adopted a law to gradually privatize Japan Post between 2007 and 2017. Over this same period, the Japanese postal market will be deregulated. Full deregulation will not be accomplished for many years because of the complexity of their many business lines. Unlike U.S. and European postal services, Japan Post also runs the nation’s largest bank (which is also one of the world’s largest), the nation’s largest insurance company, as well as many other services.
The Post will be split into five new private businesses: a postal delivery corporation, an over-the-counter services corporation, a postal savings corporation, a postal insurance corporation and an independent agency to deal with old accounts.
European Union (E.U.)
The E.U. has issued a proposed directive that will require all member nations to open their postal delivery services to competition by 2009. Thus far, Sweden, Finland, the Netherlands and the United Kingdom have either done so or made plans to comply. Many other countries are dragging their feet on complying with the directive.
Such a move would be extremely unpopular in many E.U. member countries, making passage difficult. Therefore, in order to accomplish deregulation, the decisions were pushed up a level for the non-democratic E.U. board to try to force these changes upon all member countries.
For more see What will the new proposal do?
Even the top postal officials in many of these countries are expressing concern over E.U. plans.
Union Network International
Union Network International (UNI), of which the NALC is an active member, is fighting against this mistaken approach by reaching out to allies to inform them of the inherent contradiction in the proposed directive.
Europe vs. North America
Differences between European and North American labor markets would create different experiences under deregulation. To date, a few countries have fully privatized their postal services. However, those countries’ experiences are not good indicators of the likely results if these same policies were implemented in the United States.
For instance, Sweden, Finland, and the Netherlands have strong labor laws that protect workers' rights. Therefore, competitors are forced to play on a fairly even playing field with the public delivery networks.
That is not so in the U.S. where:
- The minimum wage lingers at $7.25 per hour.
- Health care is not guaranteed in the U.S. (though it is publicly provided in EU countries).
- Pension coverage is not mandated
- Organizing rules are much weaker in the U.S.
- Rules maintaining paid time off are not nearly as strong as those in the above countries
Naturally, this leads the NALC to the conclusion that our weak labor laws provide much more room to undercut the wages and benefits of postal workers in the U.S. than exists overseas.