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Last Updated: Tuesday, 17 October 2006, 03:55 GMT 04:55 UK
France's La Poste prepares for battle
By Hugh Schofield

A recent report to the French Senate on the state of La Poste made depressing reading.

French post box
The Senate says monopoly has led to inertia
In 1996, it said, the German and French post offices had been more or less on a par. Eight years later, the turnover of the German post office was double that of France's; its profits were eight times bigger, and internal investment was three times as high.

On top of that, the quality of the German service was improving, with a next-day delivery rate of 90%, compared to 75% in France.

The difference, of course, was that Germany had privatised and reformed its postal service, while France's venerable public institution, complete with 330,000 staff and 17,000 bureaux, had stayed stock still.

"La Poste remains fixated on the era of the monopoly," the Senate report thundered.

"Its unique status... served as a fig-leaf for inertia, instead of being a goad to modernisation, which is the only way to survive."

Double whammy

As the spectre of full-scale EU liberalisation of postal services begins to loom, there is a mounting realisation in France that reform has to come - and fast.

According to the Senate report, a staggering third of La Poste's activity is conducted for just 80 clients
After a century as the country's sole distributor of letters and parcels, La Poste is suddenly facing a ghastly double whammy: On the one hand, the steady replacement of paper post with the electronic variety, and on the other the likelihood that in 2009 other more efficient operators will be moving on to its patch.

In the first half of this year - for the first time ever - the volume of mail carried by La Poste fell.

And the enterprise is dangerously exposed because a vast amount of its profits are generated by a very small number of business clients.

According to the Senate report, a staggering third of La Poste's activity is conducted for just 80 clients.

For these to switch to electronic mail - as for example the national health insurance scheme is increasingly doing - spells disaster.


At the same time, the EU looks set in the next few days to announce that from 2009 all letters - and not just those weighing more than 50g, as is the case today - can be handled by any operator in any country.

Management's aim is to transform La Poste into a profitable company - all the better to privatise it
CGT Union
The French government is leading a rearguard action in Brussels, warning that "universal coverage" - the principle that the same service applies across every part of the country, no matter how remote - will be threatened by out-and-out liberalisation.

But the Commission looks unlikely to back down, especially as it already has La Poste in its sights on a number of other counts.

Brussels wants to know, for example, why it is that the Banque Postale - the post office's banking subsidiary - has the sole right to issue the highly popular tax-free savings bonds called Livret A.

It wants the French government to remove the "state guarantee" which it extends to La Poste, allowing it an advantageous credit rating when it raises money on the markets.

And the Commission says that the special pension system enjoyed by La Poste retirees also amounts to unfair competition, because the enterprise has been exempt from paying a large chunk of the otherwise compulsory social charges.

Pocket computers

La Poste's traditionally militant trade unions are watching developments with dread - fearing job-losses, pay-cuts and the closure of hundreds of "unviable" bureaux.

"Under the guise of opening up mail to competition... management's aim is to transform La Poste into a profitable company - all the better to privatise it," said the CGT union, calling for a day of strikes and demonstrations next month.

But everyone can see that change is coming.

Last week La Poste's management unveiled a 700m euro (470m) investment plan - designed to equip the company for the future.

The 100,000 postmen and women are to have pocket computers and GPS monitors; there will be 12,000 bicycles with pivoting seats as well as 400 electronic bikes; and staff will take on other jobs like reading gas meters.

The message is clear: once again a French state mammoth is being prepared for the Brussels steeplechase.

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