Postal Services.

Dáil Éireann Debate, Tuesday - 3 February 2004

Tuesday, 3 February 2004

Questions (222)

Arthur Morgan

Question:

351 Mr. Morgan asked the Minister for Communications, Marine and Natural Resources if he intends to honour the transformation agreement that provides for the establishment of an employee share ownership plan for postal workers which was signed in July 2000 by the Government, the company and unions; if the staff have delivered their side of the agreement and the Government have been informed of this by the board of An Post in May 2003; when the legislation required to give effect to the ESOP will be published; and if he will make a statement on the matter. [2760/04]

Written answers

Minister for Communications, Marine and Natural Resources (Mr. D. Ahern)

The An Post ESOP, which was signed in 2000, provided for the transfer of up to 14.9% of the company to employees on a phased basis in return for specified costs savings and profits. Of the transfer, 5% was for transformation and 9.9% was a profit share. The purpose of the ESOP was to facilitate the transformation of An Post into a viable and profitable postal operator in order to successfully deal with challenges arising from liberalisation and electronic substitution. In return for 5% of the company, cost savings amounting to €34 million were to be achieved between 2000 and 2003. However, instead of achieving savings the opposite has happened. Staff costs rose by €24 million between 1999 and 2000, which represents a 6% increase, by €52 million between 2000 and 2001, a 13% increase, and by €40 million between 2001 and 2002, an increase of 9%.

The table below sets out profits envisaged under the ESOP and the actual financial outturn for the company:

ESOP	Annual Report
	€m	€m
2000	7.6	9.8
2001	8.9	(6.7)
2002	20.3	(17.8)
2003	34.3	(29.5) forecast

In May, 2003 the An Post board advised that cost savings for 2000 set out in the ESOP amounting to €7 million had been achieved. However, according to documentation supplied by An Post at that time, achievement of savings was substantially below target levels in the ESOP agreement, was delayed, and took place between 2001 and 2003 instead of in 2000. In September 2003, An Post advised, following a review of company finances, that forecast profit of €1 million had turned into a loss of €29.5 million. Having regard to the substantial losses notified by An Post for 2003, the board has been asked to review the cost savings verification process and respond to the Department. We are still waiting for a response from the board of An Post on the verification of the cost savings issue.

The Government remains committed to an ESOP in An Post if it can be demonstrated that real transformation has occurred and that the cost savings envisaged in the ESOP have been achieved.