Canada Post goes Postal

June 14, 2011


Canada is facing a postal strike that shows the extent to which taxpayers are getting hosed by government and quasi-government unions.

There is an excellent article in the Montreal Gazette today Going postal: A look at the labour dispute Canada Post and CUPW. The article highlights the contract concessions that the union is demanding and contrasts it with management’s offer. Here are the costly items, the ones not offered in the private sector but part of public sector goodies.

Union wants:

Increased job security

The unions is worried about plummeting revenue at Canada Post and the impact they will have in the future.

To maintain current sick-leave provision, which allow workers to accumulate sick time so it can be used if they become seriously ill.

In the public sector the best feature of this sick time program is that it is paid out at retirement time as a lump sum payout. Many public sector contracts include 10 to 15 days a year in sick time. Going a few years without sick days adds up to a pretty big bonus.

The current arrangement allows for 15 sickdays per year. After 8.7 years this is a half-year’s salary or 150 days adjusting for weekends.

More abuse is heaped onto taxpayers when employees can use severance from sick time to “Buy back” extra pension at about 5 cents on the dollar. Pension Buyback works the same for all public sector employees

A reduction in forced overtime to address staffing issues

Canada Post has its own special union – CUPW to fight for their contracts. The union revenue is based on total employees and payroll. Although there are no disclosure rules in Canada like in the US, the revenues generated are pretty substantial. Canada Post paid out $ 3.9 billion in salaries last year. We estimate that union dues are around 1.5% to 2% of salary. This would amount to the unions is collecting in the range of $60 million every year. What the hell do they do with this much money? Should there not be some disclosure? See the US DOL Union financial reports.

No reduction in starting wage for new hires, which currently stands at $23 per hour. Imagine that a starting job with the government earning almost $50,000 per year. Add in another 40% for benefits and the cost for a new employee at Canada Post is about $65,000 per year. For what?

The management wants to split the contract into two parts, one for new employees and one for current employees. They are proposing extravagant benefits for even the future employees. The package includes:

Future employees:

Comprehensive health benefits for employees and retirees

This is taxpayers abuse. The pension plan is already under funded and at the end of 2010 the plan was short $3.22 Billion and had funding of only 83%. Employees are owed $2.8 Billion in OPEB’s or Future Employee Benefits.

Retiree health benefits are expensive. Currently Retirees must pay premiums of 25% for the EHCP and 40% for dental. The current trend is to raise these to a minimum of 50%.

In 2009 the profit at Canada Post was $281 million. Already it owes its employees 10 years of profits in OPEB’s.

Up to six weeks vacation

The current schedule for vacation time is from the Canada Post website

  • 3 weeks per vacation year with less than 7 years of continuous employment.

  • 4 weeks per vacation year with 7 years of continuous employment

  • 5 weeks per vacation year with 14 years of continuous employment

  • 6 weeks per vacation year with 21 years of continuous employment

  • 7 weeks per vacation year with 28 years of continuous employment

A fully indexed defined-benefit pension by age 60

Why is it that regular Canadians take a hefty penalty for taking CPP before age 65 when the public sector gets full pension including an allowance for CPP at age 55? The process the use is called the Bridge Benefit, which is paid from the day you retire until you turn 65 years of age? Move the retirement age to 65, the same as the taxpayers funding workers retirement.

Current Employees:

No changes to a fully indexed defined-benefit pension plan

Comprehensive health benefits for employees and retirees

Up to seven weeks of vacation leave annually

I think it is time for taxpayers to go on strike. There was another excellent editorial in the papers today Save Canada Post? Why bother?. There are voices out there who suggest that Canada Post is worth saving but ask at what cost asks a former CEO of Canada Post ? The Future is in the Mail

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