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US postal system in dire debt mess

US postal system in dire debt mess

BUSINESS: There’s an inscription on the James Farley Post Office in New York City that reads, “Neither snow nor rain nor heat nor gloom of night stays these couriers from the swift completion of their appointed rounds.”

Saturday 10 September 2011, 08:26AM

But it looks as though debt may stay the postmen in the US.

According to a New York Times report on Monday the US Postal Service (USPS) will be unable to make a US$5.5 billion (B165 billion) payment this month and deliveries could shut down entirely this winter if the government does not step in.

“Our situation is extremely serious,” Postmaster General Patrick Donahoe told the newspaper in an interview. “If Congress doesn’t act, we will default.”

The service, a public employer that claims to handle nearly 40 per cent of global mail, has been piling up losses since early 2008 due to rising costs and a decline in volumes caused by rising Internet use and e-commerce.

In July, the service unveiled a plan to close more than 10 per cent of its post offices throughout the United States. It had already slashed 110,000 jobs – 16 per cent of its workforce – in the past four years to cut its wage bill.

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The US$5.5 billion payment due at the end of this month is meant to finance retirees’ future health care. A Senate committee was due to meet this week to discuss the postal service’s financial difficulties.

Donahoe has in recent weeks been considering the elimination of Saturday deliveries, the closure of 3,700 postal locations and the laying off of 120,000 workers to help close a US$9.2 billion (B276 billion) financial hole, the Times report said.

Further job cuts would be considered extremely difficult to implement because of a new no-layoffs clause in contracts negotiated with postal unions in May.

“We’re going to fight this and we’re going to fight this hard,” Cliff Guffey, president of the American Postal Workers Union, was quoted by the newspaper as saying.

“It’s illegal for them to abrogate our contract,” he added. – AFP

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