Canada Post’s 50,000 unionized workers probably were cheering last October when Justin Trudeau’s Liberals swept into power, replacing the despised Harper government. After all, the Liberals had promised in their electoral platform to “save home delivery”, along with the thousands of mail-carrier and other unionized positions threatened with redundancy after the 2013 decision to phase out door-to-door mail service.
“We will stop Stephen Harper’s plan to end door-to-door mail delivery in Canada,” the platform stated. Sure enough, within days of the election, Canada Post announced that it had temporarily suspended the program to progressively transfer more than five million households to community mailboxes from door-to-door delivery.
But something interesting happened soon after. After initial talk of forcing out Deepak Chopra as CEO of Canada Post (the Harper government last summer quietly gave him a five-year contract extension — six months ahead of schedule) the Liberals decided to keep him on. Chopra, who joined Canada Post in 2011 after a career at Pitney Bowes, is a no-nonsense executive who was behind the ambitious plan to turn the Crown corporation from a quasi-public service into a nimble competitor in the parcel delivery business.
Chopra’s oft-stated goal is to scale back the domestic mail business — which has seen volume plummet by 32 per cent from its peak ten years back, as businesses and individuals migrated en masse to electronic transactions — and turn the company essentially into a parcel business. Canada Post has managed to take advantage of the boom in online shopping, becoming the dominant player in a competitive business against the likes of UPS and Federal Express.
With Chopra remaining at the helm of Canada Post, the Liberals have neatly washed their hands of their promise to restore the glory days of five-day-a-week home delivery to Canadians in established urban neighbourhoods. In May, Public Services Minister Judy Foote launched an outside review of Canada Post to determine the future of mail service — even as she backed away from earlier promises to undo the Harper-era reforms. She said she didn’t know what the future of home delivery would look like, whether it would be two, three or five days a week. Score a win for Chopra.
Now, the Canada Post boss is turning to another major transformation he intends to make at Canada Post: bringing its massive pension obligations under control. The Crown corporation, like other legacy businesses, is facing a looming crisis with its $22-billion pension plan, as the business shrinks and the number of retirees grows. Last year, the plan had 53,238 working members and 33,448 retirees. And another 18,000 will reach pensionable age within five years.
If it weren’t for pension relief given to the Crown corporation by the Harper government, Canada Post would have had to pay another $1.4 billion last year in special payments to reduce the plan’s $5.9 billion solvency deficit. But that relief runs out in 2018 — and with interest rates so low, a quick turnaround in the plan’s fortunes isn’t expected.
To reduce pension costs, Chopra has proposed forcing new Canada Post employees to accept a defined contribution pension plan rather than the traditional defined benefit plan, where retirees are guaranteed a monthly payment based on their salary and years of service. Lots of big companies, including the banks, have done this in recent years as a way of reducing pension liabilities. Bad for employees — good for the corporate bottom line.
Introduction of the new pension arrangement is at the heart of the current labour dispute at Canada Post, with the company threatening a lockout as early as Monday if the union doesn’t agree to its demands. Canada Post has offered to submit to binding arbitration but the Canadian Union of Postal Workers has said no to that offer. Canada Post is clearly playing hardball and Prime Minister Trudeau says the government won’t intervene and force a settlement, as happened in 2011.
If mail service stops, the danger is that nobody will notice. Postal workers have promised to continue to deliver federal benefit cheques — but only two per cent of seniors still get their old-age security payments by mail and only five per cent of Employment Insurance cheques arrive by post. A prolonged work stoppage will only encourage more Canadians to sign up for electronic payments and bills and forget the postal service completely.
For organized labour, the idea of a two-tier pension system is frightening — particularly in the public sector, which has become the last bastion of defined-benefit plans. If Canada Post goes to a contributory scheme, other Crown corporations at the federal and provincial level could be next.
Ironically, the recently agreed-to expansion of the Canada Pension Plan — a major win for organized labour — may support the employer’s side in this case. Although a defined contribution scheme will never be as generous as a defined benefit plan, Canada Post can argue that it’s not taking anything away from existing employees and that future postal workers will be the very people who will benefit over the course of the coming decades from an expanded CPP.
It’s an argument you can expect other employers, including those in the public sector, to use in the future.
Crafty, these Liberals.
Author: Alan Freeman