Postal Service seeks key concessions as contract talks open with largest union

By Lisa Rein and Ed O'Keefe
Thursday, September 2, 2010; B03

The U.S. Postal Service, headed toward a loss of at least $7 billion this fiscal year, opened contract talks with its largest union Wednesday seeking cost cuts that could reshape the nation's mail-delivery system.

In addition to concessions on wages, health benefits and working conditions, the Postal Service says it must pare its full-time workforce and expand the use of part-timers to stay afloat. Postal officials said that with declining workloads -- Americans have sent 20 percent fewer letters and packages since 2007 -- they can no longer guarantee eight-hour shifts for clerks, mail handlers, carriers and other workers.

"We can't count on things returning from the past," Anthony Vegliante, the agency's chief human resources officer and labor negotiator, said this week. "We have seen a lot of things happen in the last three to four years we never expected to happen."

A shift to part-time and seasonal work will probably be just one sticking point in contract talks that could be the most acrimonious in years as the economic slump and the shift to the Internet continue to eat away at the Postal Service's core business.

Union officials said that while they recognize the Postal Service's precarious finances, they will fight to preserve hard-won working conditions and benefits that include the most generous health-care package in the federal government.

"We recognize the challenges facing the Postal Service," said William Burrus, president of the American Postal Workers Union, which represents about 211,000 mail clerks, maintenance workers, custodians, supervisors and drivers. "We do not view them, by themselves, as determining the future of the Postal Service."

"We have no intent of forcing our members to begin their lives all over again. We see no justification for unraveling agreements made over 40 years," Burrus said.

The 207,000-member National Rural Letter Carriers Association heads to the bargaining table Sept. 13.

Four-year contracts with both unions expire Nov. 20. Unions representing letter carriers and mail handlers are scheduled to begin bargaining next year, when their five-year contracts end.

To stem their losses, postal officials have offered early-retirement incentives and whittled down the workforce through attrition. They have proposed raising rates, eliminating Saturday mail delivery and cutting annual multimillion-dollar advance payments for retiree health benefits.

But with labor costs accounting for 78 percent of the Postal Service's budget -- at $56 billion in fiscal 2009, an expense far in excess of wages and benefits for UPS and FedEx workers -- management is seizing its first opportunity in four years to squeeze concessions to cover its losses.

"Everything's on the table in this round of negotiations when it comes to costs," Vegliante said.

Starting salaries are $42,611 for a city letter carrier and $40,558 for a mail clerk.

The rural carriers, a combination of career employees and part-time apprentices who do not receive benefits, work under a system that compensates them for the volume of mail delivered. The downturn has hurt these carriers, although some have been able to make up some income by working extra days, union officials said.

"We believe we can maintain the quality of life for rural carriers and build on what we've negotiated . . . and help the Postal Service address some of the issues it faces," said Michael Gan, the union's general counsel.

The Postal Service contributes about 79 percent to employee health premiums, compared with 72 percent by other federal agencies. In the last round of negotiations, management won a 1 percent per-year reduction. Officials estimate that the agency could save $560 million annually if its contributions were on par with other federal agencies.

About 300,000 retirements are expected in the decade. But Vegliante said attrition won't be enough, and he hopes to win concessions from labor to replace many full-time jobs with part-time, seasonal workers.

He said the Postal Service is unlikely to ask workers to take on different job assignments when there is not enough work to fill out their shifts.

Burrus said he would look skeptically on any proposal to significantly increase part-time work. "Where there is full-time work available we expect it to be filled by full-time employees. . . . We believe there is plenty of full-time work available," he said.

Negotiations could last six months to a year, Postal Service officials say. If arbitrators step in, the Postal Service could ask Congress to pass legislation that would require them to consider the agency's financial condition