Cyprus Mail

Ambitious plan to improve postal system

The government has taken the political decision to make the Cyprus Post an ‘autonomous’ entity, the stated aim being to improve the efficiency of the state-run postal services and enable them to compete in the liberalised market.

Transport Minister Marios Demetriades, who formally submitted the proposal to the cabinet last week, told the Cyprus Mail that the postal services are a loss-making organisation, owing chiefly to high operational costs which in turn are mainly the result of the remuneration of employees, who are currently civil servants.

“Our objective is make the Cyprus Post more flexible so that it can compete,” he said.

The Cyprus Post is a department of the ministry of transport and communications. It currently employs around 600 people nationwide.

Demetriades confirmed a report in daily Politis, according to which a government-commissioned study carried out by PricewaterhouseCoopers (PwC) found that the best option to render the Cyprus Post autonomous from the central government was to transform it into a public company under private law.

Under this model, the state would initially be the sole shareholder in the new company. This would leave open the possibility of a subsequent shares-issue to interested private stakeholders.

Although Demetriades was unable to cite hard figures at the time he was contacted, he said the government-run postal services were losing market share to private competitors, particularly in the area of parcel dispatches.

He likewise confirmed that the plan is for the relevant government legislation to be passed in the House by late 2017.

Work on drafting the bills has not yet begun, he added. This would be done once the ‘social dialogue’ with the affected trade unions was completed.

The dialogue is already underway, with the government having appointed a technical committee consisting of state officials and trade union representatives.

Demetriades stressed that, even if the Cyprus Post were to be eventually partially privatised, this would require the nod from parliament, as prescribed under the privatisations law.

According to Politis, although PwC determined that the best option is to turn the Cyprus Post into a public company governed by private law, they also stated that even under this scenario it would take around five years for the reorganised service to become financially viable.

PwC outlined four alternatives. The first envisions Cyprus Post employees retaining their civil servant status, with all the benefits and perks, but under a new employment contract between the postal service and the state. Savings would gradually arise as current employees retire.

It appears to be the preferred option for both the government and opposition parties as well as the trade unions, especially on the PR level, since the employees’ civil servant status would not be touched.

The second proposed method is to have current employees classified as being on unpaid leave and at the same time their entering into a private sector-type contract with the new entity.

Under the third option, employees would resign from the Cyprus Post and be hired by the new company.

And lastly, workers will be given the option for early retirement. Alternatively, they can choose to be transferred to another government department, retaining their pay and benefits.

Politis reports that the main civil servants union, PASYDY, prefers that the Cyprus Post is turned into a semi-governmental organisation, rather than into a state company under private law. Likewise, the OEKDY-SEK union, representing people employed in the public service as hourly-paid staff, which argues that it will be easier to ‘sell’ the SGO idea to the unions and the employees.

On the other hand, unions ASDYK, PEO and DEOK are outright opposed to the abolition of the Cyprus Post and its re-establishment as a new entity.


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