Staff at An Post cannot expect to receive the full terms of the Sustaining Progress national agreement until a series of challenges are addressed at the company, Labour Relations Commission assessors have said. Emmet Oliver reports.
An Post faces the prospect of the possible imposition of VAT on postal services by the EU, a pension deficiency and lack of progress on a price rise, the assessors have found.
The report found the company had an "underlying" operating profit of €22 million in 2004, but was facing serious challenges in the years ahead.
Unions at the company have complained in recent months that An Post is capable of meeting in full the terms of Sustaining Progress, especially after recently selling two mobile top-up companies in a deal worth more than €100 million.
However, the assessors conclude that taking an after-tax figure or reserves is not the ideal way to examine the company's financial profile. Instead, it described operating profits as "a better barometer".
On the VAT issue, a spokesman for An Post said it was aware of the potential threat represented by VAT on postal services, but the European directive was unlikely to be imposed before January 2007. However, when it is, "it will have significant cost implications", he added.
The assessors' report was used to support the recent recommendation that staff at the company should be paid a 5 per cent pay increase but not the full terms of Sustaining Progress.
The assessors claim that a higher pay award could not be justified until wider structural issues at the State company were tackled.
Before arriving at their conclusions, the assessors, Brian Aylward and Ray McElroy, listed a serious of factors that needed to be considered, including: the difficulty of getting agreement on rationalisation at the company; the need to finally get benefits from the "sunk investment in technology"; a growing pension deficiency; and the task of retaining customers, particularly if prices go up.
The reference to VAT concerns a draft directive circulated last year by the European Commission, which suggested that VAT (possibly up to 21 per cent) be imposed on postal items. This has yet to be ratified by EU members but postal services throughout Europe are concerned about its implications.
The assessors' report says that both sides in An Post need to recognise the reality that "expenditure on essential operating equipment cannot remain frozen and there is a need to face into VAT and pension outlays".
While unions have expressed anger about the findings of the assessors, their report makes it clear that further pay increases could still be sanctioned.
"The assessors are satisfied that the implementation of the required rationalisation and the realisation of a reasonable price increase will generate profits capable of financing the balance of the overall Sustaining Progress programme," according to the report.
