Tentative Labor Agreement Between Postal Service, Union
The deal could save $3.8 billion.
The U.S. Postal Service told Congress Tuesday that, after eight months of negotiations with the American Postal Workers Union [APWU], a tentative labor agreement has been reached between the two groups that will generate an estimated $3.8 billon in savings.
The plan, if accepted by APWU, will freeze wages for two years for career postal employees, ratify pay schedules for new employees and incorporate more non-career postal workers.
Postmaster General Patrick R. Donahoe told the House Committee on Oversight and Government Reform that the deal represents a "greater workforce flexibility, immediate financial impact and long-term structural changes," according to a news release.
Donahoe wants to take postal reform a step further.
"We need reform in the laws that govern us," he told the committee, according to a news release. "We must get beyond the mandates that we prefund retiree health benefits, that we overfund Federal Employee Retirement Systems [FERS] and that we deliver mail six days a week."
A 2006 law requires the Postal Service to prefund retiree health benefits which totals $5.5 billion per year. The postal system also has a statutory mandate to contribute to FERS, which has caused an overpayment of $6.9 billion to date.
Since 2008 there has been a 21 percent decrease in mail volume, which prompted a reduction of 110,000 employees and $11 billion in costs. In 2010, however, the Postal Service recorded a net loss of $8.5 billion.
It is estimated that six day a week service costs the Postal Service $3.1 billion every year. No tax dollars contribute to the Postal Service’s operating expenses — there is a reliance on the sale of postage, products and services.
"After many months of difficult negotiations, (the tentative agreement) was the best achievable under existing law," Chairman of the Postal Service Board of Governors, Louis J. Giuliano, told the House committee, according to a news release. "Years of experience have taught us that these types of breakthrough changes in workforce utilization are very unlikely in an arbitrated settlement."
The agreement covers 205,000 career postal employees for a four-and-one-half period up until the year 2015 – wages will be frozen during the first two years. The deal also establishes a two-tier career pay schedule for new employees that are lower than the existing schedule by 10.2 percent.
Currently, the Postal Service is restricted to using 5.9 percent of non-career employees for services; the deal will remove restrictions and boost the number to 20 percent.
"It’s the nature of such negotiations that neither side got everything they wanted," Donahoe said in a news release. "Neither side was willing to take the expedient way out, to simply roll the dice, and leave our respective fates to a third party arbitrator. We need the flexibility to properly schedule our workforce and we have achieved that. Interest arbitration is not going to result in flexibility gains of this magnitude."