OTTAWA—Canada Post and its employees have merely reached a “peace treaty” ahead of the busy holiday shopping season, a business lobby group warned Wednesday, predicting little but long-term pain for the Crown corporation.
The agency will be forced to confront lost business, a massive pension shortfall and a parliamentary review of its operations in the coming years, the Canadian Federation of Independent Business said after Canada Post reached tentative agreements Tuesday with the Canadian Union of Postal Workers.
The labour dispute had been grinding away for more than nine months before the agreements were reached with each of Canada Post’s rural and urban carrier groups with the help of a special mediator.
Under the agreements, which could take months to ratify, an independent body will study the pay equity issue that was at the core of the months-long labour dispute that saw workers threaten job action and Canada Post contemplate a possible lockout.
But the tentative two-year deals failed to bridge a key divide over the corporation’s mammoth pension plan.
Canada Post had sought changes to the plan for new employees as it deals with an estimated $8-billion solvency deficit, insisting new hires be covered by a defined-contribution plan rather than the current defined-benefit plan.
But the Canadian Union of Postal Workers balked, accusing the agency of trying to institute a two-tier pension system. The agreements mean that any such demand has been put off for at least two years.
In the short term, the agreements will be good news for businesses that had been worried about how they were going to deliver goods to customers as the Christmas period approaches, said CFIB president Dan Kelly.
“Certainly it will be a relief for a lot of small business owners … that there is a peace treaty at the moment,” Kelly said. “Even the threat of a job action has meant that businesses have had to look at alternatives in advance.”
But a combination of reduced letter volumes, customers lost for good because of the labour strife and the giant pension hole means dark days ahead for Canada Post, he predicted.
“This deal will not do anything to fix the long-term problems that the corporation has,” Kelly said. “This will inevitably bite the corporation and bite workers.”
It won’t be clear until the fall how the labour dispute affected the corporation’s bottom line. The agency squeezed out what it described as a “break even” $1-million surplus in the first half of the year after recording a profit in 2015.
But while Canada Post tallies its third quarter financial results, the agency must do everything it can to convince customers who may have dropped the postal service over the summer to come back, said spokesman Jon Hamilton.
“A lot of them have now had a little bit of experience with our competition,” Hamilton said.
“That could be a good thing or a bad thing for us…. We need to rebuild that trust and work with them.”
The federal government launched a review of Canada Post operations in May after the planned cancellation of daily home delivery became a hot button issue during last year’s election campaign.
A discussion paper from that review is expected to be released shortly, with public hearings scheduled to begin in late September.
That’s when the union hopes to convince the Trudeau Liberals of the virtues of creating a postal banking service, said CUPW national president Mike Palecek.
“We can now turn towards the hearings that are going to be taking place in a few weeks and we’ll be articulating our vision for the future of Canada Post,” Palecek said.
CUPW has suggested Canada learn from other countries, such as France and New Zealand, to create banking outlets in small communities no longer served by the chartered banks. Canada Post has dismissed the idea as too risky.