I thank Deputies for tabling their questions and giving me the opportunity to say a few words in regard to this issue.
I welcome the decision of the Labour Relations Commission, LRC, to invite An Post management and the Communications Workers Union to talks tomorrow on the current industrial difficulties in the company. In the context of the proposed intervention of the LRC, it would not be appropriate for me to become involved or pre-judge in any way the deliberations of tomorrow's meeting, but I wish them well.
The Taoiseach is also of the view that the established industrial relations mechanisms should be used in this instance. In disputes of this nature, the people ultimately affected are An Post customers and, for this reason, I encourage all parties to the dispute to engage fully with the LRC to resolve the current difficulties. The restoration of services, which An Post customers are entitled to expect, is required now.
The issues involved in this dispute are complex. However, there is one underlying reality which can not be ignored. An Post is in deep financial trouble and no amount of wishful thinking can airbrush away this reality. The simple facts are the company is losing €600,000 every week, that is, €120,000 per working day or €2.5 million each month. This is the stark reality that all sides must address. To do otherwise is to walk away from responsibilities, not just to the taxpayers who own the company but to the employees who work for it and the customers who rely on it.
The problem is more serious than that. Between 2002 and the end of this year, An Post will have lost €100 million. Its cash reserves are almost exhausted. The company has only a finite amount of family silver to sell to keep afloat. The economy and the public cannot afford to bear continuing price rises to sustain the existing cost structures of the company.
An Post must return to profitability. To do this the company needs a cost base which reflects reality. The company has to change but time is not on its side.
The company is facing significantly more competition. Customers, particularly those in business, have increasing choice. With increasing choice comes keener pricing, more challenging service requirements and competition from e-mail and mobile texting. The postal market is liberalising. Efficient and aggressive operators and efficient operators in Europe, such as Deutsche Post and the Dutch operator, TPG — both partly state owned — are chasing business in Ireland through their subsidiaries. Until An Post aligns its cost base and efficiencies with industry leaders it will not be in a position to meet the challenges arising from liberalisation, globalisation and changing technology.
The current industrial relations in An Post have been simmering for some time. An Post customers in Drogheda, Tuam, Galway and Mitchelstown have been suffering disruption to postal deliveries since early February. Its escalation into the Dublin area and surrounding counties and international mail deliveries is a very damaging development.
The economy cannot afford disruption to an essential service such as the postal network. Business lost cannot easily be regained. I have urged all parties to the dispute to bear this in mind. However, I caution against sticking plaster solutions. The problems in An Post are substantial and real. The solution to the current issues must put the company on a long-term sustainable financial and operational footing.
The rationale for the employee share option plan was to give An Post employees a stake in a reformed and profitable company, quite simply a stake in their future. The plan provided for the transfer of up to 14.9% of the company in return for cost savings and specified profit levels. Savings amounting to €34 million were to be achieved between 2000 and 2003, and 5% of the transfer related to the delivery of savings within specified timescales. The remainder of the shareholding, 9.9%, was contingent on profits. In May 2003, the board of An Post claimed that savings amounting to just €7.17 million had been achieved under the plan.
In view of the underlying financial situation in An Post, I decided to commission a review of the company ESOP to see whether, in fact, the share option plan has contributed in any way to company transformation as required. I expect to receive this report shortly. However, the indications are that neither the savings nor the profits projected have been achieved. However, the Government and I are fully committed to the ESOP provided that the change and cost-saving terms of the agreement are delivered. This has clearly been communicated to the CWU and the other unions.
I am assured that An Post and the Department of Social and Family Affairs have put in place measures to ensure that welfare recipients paid by cheque receive their payments. Social welfare clients who are paid through the post office are not affected by the current dispute.