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Česká pošta prepares for cuts

Postal service will lay off 2,500 in preparation for privatization

By Claire Compton
Staff Writer, The Prague Post
July 30th, 2008 issue

In an effort to push ahead with ongoing privatization and consolidation efforts, state-owned postal service Česká pošta (ČP) is planning extensive job cuts.
Nearly 2,500 of the company’s 37,000 employees will be laid off by Oct. 1, CEO Karel Kratina announced July 28. “We have been planning these layoffs for a long time,” he told the daily Právo. “It was a long-term project and is the result of changes happening at Česká pošta.”
The layoffs are linked to the centralization of the company’s control system. According to Kratina, they are a necessary step toward maintaining a competitive advantage.
“We have to work effectively in order to have a chance to succeed on the market and pay our people well,” he said. Company wages increased 14.5 percent this year, and another salary raise would be impossible without any consolidation, he added.
ČP is one of the largest employers in the country, after railway operator České dráhy. The Finance Ministry initiated plans in 2006 to privatize ČP in accordance with a European Union directive to create a completely liberalized market by 2013. By the middle of next year, the ministry plans to transform the postal service into a joint-stock company.
ČP is currently the local market leader in parcel service, followed by competitors DHL and PPL CZ. Both competitors are controlled by Deutsche Post, and in June opened million-crown reloading centers in Plzeň.
This increased competition is driving ČP’s consolidation efforts.
At the start of 2008, the company closed its independent branch plants to introduce a new organizational structure in preparation for privatization. Kratina said those closures can explain the upcoming layoffs.  
“These units were very autonomous, one could even say there were seven different Česká poštas,” he said. “The main aim was to have unified processes and technologies and reduce administration. That means that mainly those employees who work in our administrative facilities will leave the company.”
The layoffs will not affect customers. “Those clerks who are in direct contact with our customers will keep their jobs,” he added.
After an initial loss, ČP has enjoyed better numbers since the privatization process began. In 2006, the company reported a before-tax profit of 331 million Kč two-thirds less than 2005.
The company blamed the numbers on inefficient accounting operations associated with the privatization plans, and estimated that profits should have totaled 1 billion Kč otherwise. ČP reported a much different financial statement July 22, with pre-tax profits doubling to 794.5 million Kč.
The company raised its Europe-wide delivery prices in 2007, and domestic rates were raised this year.

Claire Compton can be reached at ccompton@praguepost.com


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Reader's comments:

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[15:19 04/08/2008] : Welcome to the joys of unfair trade and debt capitalism. At least in Canada we held onto a publicly owned post office. It's like that song; "you don't know what you've got 'til it's gone."
clarke aiken
toronto
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