Continued from Part 1
As we continue to review our volume, revenue and financial projections for fiscal years 2012 through 2015, it has become apparent that our financial situation is becoming even more precarious. First-Class Mail volume is declining even more rapidly than we had previously predicted. Standard Mail volume is flat, and in any event cannot adequately compensate for the declines in the much more profitable First-Class Mail that we are experiencing. Therefore, it is clear that we must reduce costs at an accelerated pace.
Our most significant area of cost is in compensation and benefits, and one key driver of those costs is simply the sheer size of our workforce. Therefore, the Postal Service has to be able to reduce the size of our workforce if we are to have any hope of insuring that our costs are less than our revenue. Based on current revenue and cost trends, and assuming a move to 5-day delivery, the Postal Service can only afford a total workforce by 2015 of 425,000, which includes approximately 30% lower cost, more flexible, non- career employees.
Attrition and certain other measures will allow us to achieve a portion of the savings needed to match expenses with revenue by 2015. We estimate that attrition will only result in a staff reduction of approximately 100,000. However, in order for the Postal Service to reduce complement to meet projected volume degradation, we must eliminate roughly 220,000 career positions between now and 2015.
In order to eliminate the remaining 120,000 career positions by 2015, to restore the Postal Service to financial viability, it is imperative that we have the ability to reduce our workforce rapidly. Unfortunately, the collective bargaining agreements between the Postal Service and our unionized employees contain layoff restrictions that make it impossible to reduce the size of our workforce by the amount required by 2015. As explained below, it is not likely that the Postal Service will be able to eliminate these layoff protections through collective bargaining, given the nature of collective bargaining and interest arbitration. Therefore, a legislative change is needed to eliminate the layoff protections in our collective bargaining agreements.
As a Solution we recommend that reductions in bargaining unit postal employees should be governed by the RIF provisions applicable to federal competitive service employees. These provisions must supersede existing contract provisions and should not be subject to modification or supplementation through collective bargaining to avoid conflicts of law and to maintain necessary continuity among bargaining units.
Applying the federal statutory and regulatory competitive service process to the postal bargaining unit workforce could be done in a manner that would produce the following positive results:
•The Postal Service could quickly reorganize and right size its bargaining unit workforce utilizing one set of established rules.
•Postal bargaining unit employees would have the substantive and procedural protections provided by RIF rules, but collective bargaining agreements would be prohibited from having no lay-off clauses. Issues related to lay-off and reassignment to lower levels would be removed as subjects for collective bargaining.
•Postal bargaining unit employees would challenge their lay-offs or involuntary reassignments to lower levels to the MSPB rather than through the grievance procedure.
•Veterans’ preference is preserved.
•The Postal Service would have a significant tool to return to financial solvency, thus protecting businesses and the majority of jobs for the hundreds of thousands of postal and other employees in the postal industry.
The recommended statutory change would be to modify Title 39, United States Code, to apply the RIF provisions of Title 5 and implementing regulations governing the competitive service to the Postal Service’s bargaining unit employees and to make clear that collective bargaining cannot modify or add to such rights, nor limit the rights of management that are part of the current federal competitive service RIF process.
In Conclusion We recognize that asking Congress to eliminate the layoff protections in our collective bargaining agreements is an extraordinary request by the Postal Service, and we do not make this request lightly. Indeed, the Postal Service generally believes that it and its unions should be free from Congressional mandates as to the provisions of its collective bargaining agreements and that the Postal Service is best served when the bargaining parties can resolve their differences through collective bargaining. However, exceptional circumstances require exceptional remedies.
The Postal Service is facing dire economic challenges that threaten its very existence and, therefore, threaten the livelihoods of our employees and the businesses and employees in the broader postal industry and overall economy, of which the Postal Service continues to play a large part. If the Postal Service was a private sector business, it would have filed for bankruptcy and utilized the reorganization process to restructure its labor agreements to reflect the new financial reality. Because this option is not available to the Postal Service, we believe that this extraordinary request is a key to securing our future and our continuing ability to provide universal service to our nation.
We are urgently engaged with Congress and the Administration to achieve a legislative resolution that will allow us to best serve our customers. Whatever the outcome, not only will it affect the Postal Service – it will shape the future of the entire mailing industry. Meanwhile, our commitment to providing excellent delivery service and connecting senders and receivers across the nation remains unchanged. We will continue to focus on our customers, and to partner with the mailing industry to ensure that together we are positioned to fulfill the changing needs of American customers.