Reference no: EM133460907

Assignment:

Canada Post is one of Canada's largest employers with almost 64,000 employees. It is a Crown corporation operating under a universal service obligation to provide the same "basic and customary service" to all and its services are considered essential. So, it would be reasonable to expect postal workers to feel that their jobs are secure and unlikely to change. But, as indicated by the rotating strikes in late 2018, their work has changed significantly.

Canada Post's legacy business is letter delivery. However, with digital communication now much more common and the majority of Canadians paying their bills online, mail volume is rapidly declining. In 2017, postal workers delivered 3 billion pieces of letter mail, down 41% from 2006. At the same time as volume is decreasing, new addresses are being added each year due to an expanding population, which increases Canada Post's costs.

While letter delivery is declining, two other areas are growing: direct marketing mail and parcels. Direct marketing mail (e.g. flyers) now makes up 56% of mail volume. But it is less profitable than letter delivery, contributing only 19% of Canada Post's revenue, and it is irritating to many Canadians who tend to view it as "junk mail". While evolving technologies have led to a decrease in letter delivery, the increasing popularity of online shopping has meant much more parcel delivery. The parcel segment posted a revenue increase of over 9% from 2014 to 2015, reaching $1.6 billion in revenue, and in 2017 surpassed $2 billion in revenue.

Postal workers literally feel the impact. They are now expected to deliver parcels ranging from cannabis and magazines to barbeques and washer/dryers. One of the major issues in the 2018 strikes was injuries. Before 2013, the rate of disabling injury amongst postal workers was less than 4%. By 2015, over 7% were hurt on the job. With a mandate to provide this essential service, but also to be financially self-sustaining, Canada Post is in a tough situation. Increasing parcel delivery revenues are offsetting decreasing letter revenues, but this may not last, with heavy competition from international couriers (think Amazon, UPS, Fed Ex).

Most of its workers are unionized, it has an aging workforce and a heavy pension commitment. It is a labour-intensive business, with 70% of its total costs in labour, and those labour costs are substantially higher than those of comparable businesses in the private sector. In order to save money, Canada Post has to reduce employee headcount. It has moved from home delivery to community mailboxes to a great extent, at the same time expanding the routes of the postal carriers. It has increased stamp prices and converted many corporate post offices to franchise outlets. But its costs are growing faster than its revenues.

Please answer the following questions.

1) What are some possible solutions to Canada Post management in a position to "fix" the situation for the postal carriers?

2) What are some of the items you would note for bargaining in the next round?