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Structural and regulatory changes and globalization in postal and telecommunications services: The human resources dimension

Report for discussion at the Tripartite Meeting on the Human resources Dimension of Structural and Regulatory Changes and Globalization in Postal and Telecommunications Services

Geneva, 20-24 April 1998

International Labour Office   Geneva

Copyright ® 1998 International Labour Organization (ILO)


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Preface

This report has been prepared by the International Labour Office as the basis for discussions at the Tripartite Meeting on the Human Resources Dimension of Structural and Regulatory Changes and Globalization in Postal and Telecommunication Services. It reviews the rapidly changing environment in the communications sector, mainly driven by liberalization, globalization and the emergence of the information society and the repercussions of such changes on employment, workers' status and conditions of work, labour relations and human resource management.

Background to the Meeting

The Meeting is part of the ILO's Sectoral Activities Programme, the purpose of which is to facilitate the exchange of information between constituents on labour and social developments relevant to particular economic sectors, complemented by practically oriented research on topical sectoral issues. This objective has traditionally been pursued by the holding of international tripartite sectoral meetings for the exchange of ideas and experience with a view to: fostering a broader understanding of sector-specific issues and problems; promoting an international tripartite consensus on sectoral concerns and providing guidance for national and international policies and measures to deal with related issues and problems; promoting the harmonization of all ILO activities of a sectoral character and acting as the focal point between the Office and its constituents; and providing technical advice, practical assistance and support to the latter to facilitate the application of international labour standards in the various economic sectors.

At its 262nd Session (March-April 1995), the Governing Body of the ILO decided that a meeting on the human resources dimension of structural and regulatory changes and globalization in postal and telecommunication services would be included in the programme of sectoral meetings for 1996-97. At its 268th Session (March 1997) the Governing Body decided that this meeting should be included in the programme of sectoral meetings for 1998-99 and that it should be tripartite. It was decided to invite the following 20 countries: Belgium, Brazil, Canada, China, Cuba, Cyprus, Egypt, Finland, France, Ghana, India, Italy, Luxembourg, Russian Federation, Slovenia, Switzerland, Thailand, Tunisia, United Kingdom and the United States. A number of countries were included in a reserve list from which further invitees would be drawn in the event that a government in the first list declined the invitation. Furthermore, 20 employers' and 20 workers' representatives were invited. The Governing Body decided that the purpose of the meeting would be to share experience in dealing with liberalization and deregulation practices, to discuss the social implications of privatization and restructuring, with special reference to employment status and levels, labour relations, working conditions and human resources development, training and retraining and to adopt conclusions that include guidance and proposals for further action, as well as a report on the discussion. The Meeting may also adopt resolutions.

Background to the report

Traditionally organized on the basis of public monopolies or, more rarely, private quasi-monopolies, the postal and telecommunications services are faced in the 1990s with the triple challenge of a technological revolution, the opening up to competition and the globalization process. Many enterprises -- often recently established or the subsidiaries of existing enterprises -- are offering new services or competing with the traditional operators.

Because of their public interest functions, the communications services have over the years been subject to special legal and economic regulations. In most cases the specific constraints concern the broadest possible provision of the universal service, the range of services proposed, the charges applied, the infrastructure to be constructed as well as the rules governing the management of human resources and working conditions. However, since it implies a new distribution of the roles between the public authorities and enterprises, the liberalization of the postal and telecommunications markets reduces or even eliminates the exceptions to common labour law which were often granted to or imposed on employees in these sectors (stable or lifelong employment, restrictions on the right to strike, special methods for fixing wages, organization of labour relations, etc.). The scope and rapid nature of the changes under way at the dawn of the information society are therefore having a profound and lasting effect on the management of human resources in the postal and telecommunications services.

The five chapters of this report review the regulatory and structural changes which have occurred in the 1990s, in particular the processes often linked to liberalization and privatization, and their effects on the structure and level of employment, training and retraining of employees, as well as on labour relations and the participation of workers in the process of change.

Each chapter contains a brief introduction and a short conclusion. The report concludes with a list of suggested points for discussion.

Acknowledgements

The information on which this report is based comes from a variety of sources. Extensive use was made of various publications as well as articles from the press. Most of the figures are based on statistics collected by the ITU and the UPU. Use was made, in particular, of such recent publications as Lessons from privatization, edited by Rolph Van der Hoeven and Gyorgy Sziraczki, and published within the framework of the ILO Interdepartmental Project on Structural Adjustment; a working paper by Dr. Stanley Wisniewski, in cooperation with the ILO Employment Department, entitled Multinational enterprises in the courier service industry: Aspects of employment and working conditions in selected enterprises, prepared within the framework of the ILO Multinational Enterprises Programme; as well as several statements and papers at the UPU High-Level Meeting on global challenges and strategies in the communications market, which was held in Geneva in October 1997. The report also incorporates excerpts from case-studies and analyses prepared for the ILO by Professor Anil Verma of the University of Toronto, and Professor Heather Hudson of the University of San Francisco. Substantial data and information were also taken from studies on employment trends carried out by two consulting groups for the European Commission -- Price Waterhouse in the postal sector and Bipe Conseil in partnership with Ifo Institut and Lentic in the telecommunications sector. Valuable information was also provided by workers' organizations and some postal and telecommunication operators.

The report, published under the authority of the International Labour Office, was prepared by Claude Duchemin (Salaried Employees and Professional Workers Branch) and by Brian J. Mallet (Official Documentation Branch).

Contents

Introduction

The communications sector and the
globalization of the economy

The postal and telecommunications sector now encompasses a very broad range of services. As a result of the expansion of modern means of communication, allowing the instant transmission of information at decreasing cost, time and space are increasingly becoming less of an obstacle to the establishment and development of economic activities. Under the constant impetus of world economic integration ("globalization"), the postal and telecommunications services are undergoing profound changes which in turn are being speeded up by the activities of an increasing number of economic agents now focusing on the "information society".

The arrival of this new economic era in the postal and telecommunications services has been encouraged by what can be called the "convergence" of technologies, in particular in the spheres of computerization, telecommunications, publishing and audiovisual techniques. The digital revolution, which allows information made up of text, sound and image to be expressed in a series of digits based on 0 or 1, is a major technological development as well as a formidable vehicle of global communication. Directly linked to these changes, a myriad range of new services, new sources of productivity, telework or distance training are spreading throughout various regions of the world. As the ILO pointed out in a discussion paper for the Symposium on Multimedia Convergence organized in January 1997, "If the common product is now information, the common service will be its electronic exchange and delivery. The convergence of the computer, telephone and broadcasting sectors into a communication and distribution industry is paving the main thoroughfares of the global information highway, along which information products and services will travel in the twenty-first century."(1)

These new technologies -- and the resulting increase in world trade -- must also be used to strengthen the fabric of social progress. As the Director-General of the ILO pointed out in his Report to the 85th Session of the International Labour Conference in June 1997, the continued liberalization of trade lays the foundation for social progress. However "the comments of various delegates (during this session of the Conference) representing workers throughout the world on the situations that have been provoked or aggravated by the sudden liberalization of trade are sufficient to convince us of the need for globalization to have some kind of social parallel".(2) Given the driving force of communications in the globalization process, the combined action of the social partners and governments in ensuring the success of changes in these key sectors for social and economic development will be of decisive importance.

In addition to this spectacular technological process, profound structural changes have appeared in postal and telecommunications administrations and enterprises, as well as significant developments in the regulatory framework at the national, regional and world levels. The old national or regional monopolies are handing over an increasing share of their activities to new service enterprises. The telecommunications sector, which is very capital-intensive, embarked upon this process of change earlier and more quickly than the more traditional postal services, although powerful changes are also affecting the latter.

The logical consequence of these structural and regulatory upheavals has been the transformation of the status -- which was often still public at the beginning of the 1990s -- of employees. This transformation has sometimes been brutal, sometimes progressive, and there has been a growing tendency towards bringing management rules into line with those of the private sector. However, this alignment is not complete since a new regulatory framework is emerging, in particular with a view to organizing competition, protecting consumers, and ensuring a balanced social and economic development.

1.  ILO: Report of the Symposium on Multimedia Convergence, Committee on Sectoral and Technical Meetings and Related Issues of the ILO Governing Body (Geneva, 27-29 January 1997), pp. 3-4.

2.  ILO: Record of Proceedings, International Labour Conference, 85th Session (Geneva, 1997), p. 278.

1.  The liberalization and globalization of
postal and telecommunications markets

Before analysing the human resources dimension of structural and regulatory changes and globalization, this chapter reviews the exact nature and current scope of the various changes under way, with special reference to the concept of "universal service", to which governments, social partners and users throughout the world attach particular importance.

The opening up of the postal and telecommunications services markets ("liberalization") is occurring at three levels: national, regional and global. The national level is historically the first stage of intervention and it is within this framework that the public, postal and telecommunications services were organized. The regional level has acquired an increasing role, particularly in Europe since the 1980s, as regards both postal services and telecommunications. Finally, the international level is now becoming increasingly visible, particularly since the establishment in 1995 of the World Trade Organization (WTO).

These three levels of liberalization now coexist and their combined effects should lead, in the coming years, to an opening up of international competition in many telecommunications services and a significant share of postal services.

"Deregulation", which means an opening up of markets and a partial or total dismantling of monopolies, is in fact a new form of regulation in the sector which is more complex and dynamic and takes into account various concerns of a general nature.

Although the pace of these developments has undeniably increased in recent years, these tendencies were already evident in some countries in the 1980s, as noted in the ILO report presented in May 1991 to the Joint Committee for Postal and Telecommunications Services: "The last few years have seen an unprecedented spate of structural changes in postal and telecommunications services (...). Structural changes have taken a variety of forms. Among the most common have been: the separation of posts and telecommunications; the conversion of one or both from a civil service department to a public corporation; conversion from a public corporation to a limited company (privatization); creation of subsidiaries; contracting out of services or franchising. Even what is termed privatization takes a bewildering variety of forms (...). Privatization and deregulation have permitted the rapid development of transnational ownership and control of telecommunications services."(1)

These trends have become more marked since 1991, beginning with the structural separation of posts and telecommunications, which means that these services will often be dealt with separately in this report.

1.1  The structural and regulatory
evolution of national Posts

Postal administrations and enterprises are faced with increasingly stiff competition from the activities of private enterprises, the expansion of new means of communication and the elimination of certain monopolies. These three phenomena are clearly linked and take strength from one another.

1.1.1  The changing nature of public services

Given the scope of the changes under way as the century draws to a close, a brief historical review will highlight certain facts and current behaviour.

Organized originally according to the private "postal routes", the postal service was unified and taken over by the central administrations of the various European countries in the seventeenth century. In 1839, it was decided in England that the postal charge levied on a simple letter would be low and independent of the distance involved. Other countries adopted the same approach from the nineteenth century. Since communication was essential in all countries, governments considered the postal services as a matter of priority, and as a factor of unity and national cohesion. A monopoly was granted to an enterprise for their administration with, as a counterpart, "universal service" obligations which are generally common to all countries, including the geographic balancing out of charges. In response to these obligations, the postal sector was organized by the public authorities and the postal services became administrations, the financial objective of which was to balance their accounts and even to participate in the financing of the state budget. This concentration occurred in most countries irrespective of the status of the postal operators.

However, in a few services such as the parcel service, there had always been competition. This had, for example, led France in 1805 to set up an adjustment fund making it possible to finance the public postal service by private enterprise.

Since its establishment in 1874, the Universal Postal Union (UPU) has contributed to the internationalization and modernization of the postal services. Since national Posts were responsible for dispatching mail from one country to another, international regulations were soon established under the auspices of this organization. The 189 members of the UPU form a single postal territory over which the free circulation of mail is guaranteed. This is the largest distribution network in the world with 700,000 post offices and about 6 million employees.

The organization of the postal sector must take into account in all countries the obligations to provide a public service and the granting of "exclusive rights" to the operators holding the monopoly. This means, in the case of the national postal services of the member countries of the UPU, that their activities are classified as obligatory or non-obligatory, either subject to a monopoly or outside the perimeter of such a monopoly. Thus, with a few rare exceptions, the problems of the liberalization of the postal markets are still often raised more in terms of the scope of the obligatory services and monopolies than the rapid and general opening up of the services to international competition, as is frequently the case in the telecommunications sector.

In fact several reasons of an historical, economic and social kind in most cases work against the rapid and general opening up of competition in the postal services. The monopoly in the distribution of letters may be economically justified in so far as economies of scale remain significant in this sphere. National postal services are still often among the leading employers in various countries.

Competition in the postal sector is acquiring new forms and becoming stiffer. This was already emphasized in the last ILO report devoted to the sector in 1991: "The postal services are having to compete with the private sector, which has already penetrated some markets and taken over the distribution of advertising material, income tax forms for the local authorities and private parcels services. This has prompted some national administrations, acting on their own initiative, to make some inroads into the post offices' monopoly, especially in the area of distribution."(2) As was recently pointed out by the Director-General of the UPU, the explosive growth of the communications market will also force more postal services to move beyond the core physical mail business and to broaden the range of choices they offer their customers. New hybrid postal products which combine electronics with hard-copy delivery are being used successfully today by the more innovative postal services.

The development of multinational enterprises and the increasing requirements of professional clients have since the 1970s played a major role in the growth of the express mail service, which often provides a guaranteed delivery period. Industrial subcontractors have become major clients of the express service, with enterprises trying to reduce their stocks, both of intermediate products and finished goods (just-in-time method). In a recent ILO study on multinational enterprises in the courier service industry, it was noted that one of the main developments in recent years has been the growth of the role of "integrators", large international operators such as UPS, DHL, Federal Express and TNT which have become specialized in international parcel services. They are referred to as "integrators" because they combine land and air transport services with freight forwarding, customs broking and other information-intensive activities that enable them to provide efficient pick-up and delivery services. Some railway companies have established their own mail service and DHL has opened up its capital to two airline companies (Japan Airlines and Lufthansa).

The success in the establishment of a veritable "world electronic trade" through the Internet will undoubtedly involve a very marked growth in these rapid delivery activities, which should encourage the development of the large express transport enterprises. As trade barriers have fallen, large and sophisticated multinational companies which, until now, have specialized in the express market are looking more and more to take larger shares of other international physical mail procedures. As with the postal market, mass mailing -- which is particularly used by mail order companies -- is often one of the first to be liberalized. Reposting is an original form of competition, while the volume of postal expenditure in some sectors such as financial services or mail-order selling is encouraging the search for skirting tactics which take advantage of the low rates of some countries.

Finally, although it is less subject to rapid technological change than telecommunications, the postal service has seen an explosion in the growth of computerized networks (electronic mail) and the use of faxes, the equipment and transmission costs of which are falling. It is five years since the number of international messages sent by fax took a bigger share of the market than those conveyed by post. In 1996, for the first time, the volume of email in the United States exceeded the number of letters delivered by the postal service.

The traditional operators have been forced to react to these developments, either on their own initiative or as a result of regulatory changes. There has been a widespread and rapid expansion of the commercial approach oriented towards the client. Many operators have been reorganized by activities (mail, parcels, post offices, in particular along the lines of the British model) and by profit centres, which has generally resulted in a reduction in the number of sorting centres, more automation and a smaller workforce.

The search for a reduction in fixed costs has also led to the use of franchising with grocery stores, petrol stations, municipal offices often providing various kinds of postal services. National operators have been forced into participation on new markets such as express mail services or electronic mail. To some extent the new rivalries between the national operators -- some of which compete with their counterparts on their own territory -- have rendered "international postal diplomacy" under the auspices of the Universal Postal Union a thing of the past.

Despite this gradual opening up to competition, the characteristics of the postal services at the end of the 1990s remain fairly similar in a number of countries. The demands placed on the postal services are often based on similar principles: homogeneous and reasonable rates, accessibility of letter boxes, dense network of postal offices, increase in the quality of service. The mail monopoly up to a certain weight remains the most common, although there has been a gradual erosion of the scope of the monopoly and the development of new services outside this perimeter.

According to the Universal Postal Union, between 1996 and 2005 the typical postal administration will probably be a corporatized state enterprise which benefits from a monopoly or an exclusive licence in the letter post market and is increasingly commercial in outlook, but whose powers, in pricing for example, are still limited. A minority will be modelled on fully private companies, listed on the stock exchange.

The status of postal operators is experiencing changes which are sometimes similar to those which characterize telecommunications. When this occurs, the transformation in the status of the national monopolies generally takes place in two stages.

First, the separation of regulation and operation activities, which implies the dismantling of public administrations, is accompanied by the establishment of separate postal and telecommunications operators.

At a second stage liberalization leads to the introduction of private management techniques and in some cases to the partial or complete privatization of the operators. Various examples of restructuring which, amongst other things, reflect these trends are described below.

1.1.2  Restructurings of varying importance

Some countries have decided to go further along the path of the deregulation of postal services and even as far as to their privatization, as in the Netherlands and Singapore.

1.1.2.1  The first steps towards privatization within the
context of controlled liberalization

The Netherlands decided to transform the Post into an enterprise as far back as 1981. As from 1 January 1989, the Postal Services and Telecommunications, which until then was a state administrative service, became a subsidiary quoted on the stock exchange of the KPN holding (Koninklijke PTT Netherlands). The group of companies forming KPN provides postal and telecommunications services through the intermediary of its two main operating subsidiaries: PTT Post BV and PTT Telecom BV. However, in June 1997, KPN announced the separation of the postal services and telecommunications into two independent enterprises. This total separation should be effective by 1998. The postal monopoly has been maintained but is now applicable only to the transport and distribution of letters under 500 g. The network of post offices is managed by a joint enterprise established between PTT Post BV and the Post Bank. The decentralization of PTT Post was completed in 1994. The operator now has seven sectors of activity: letter post, media, parcels, international service, express mail, logistics and philatelic services. The quality of transport infrastructure, the small surface of the territory and the quality of organization (automated sorting centres) make the Netherlands market difficult for foreign operators to enter. On the other hand, PTT Post BV has developed important activities in the reposting of international mail to other European States. Furthermore, KPN recently acquired a major operator in the express parcels transport sector, TNT, enabling it to compete with other postal services on the national market. This acquisition makes KPN an original and internationalized postal service, a combination of a national postal service and a global private integrator.

Singapore Post is a subsidiary of Singapore Telecommunications Limited, a private enterprise. Under a licence granted by the Telecommunication Authority of Singapore, Singapore Post will remain the exclusive provider of basic postal services (letters and postcards) up to 31 March 2007 and a non-exclusive provider of the services up to 31 March 2017. The local and international express letter market has been liberalized since April 1995.

1.1.2.2  The cautious liberalization of the postal sector

In most countries, however, the liberalization of the postal services is gradual and follows the pattern already noted, with the transformation of administrative services into public enterprises and the possible partial privatization and opening up of competition for new services or services outside the monopoly.

The Americas

In Latin America, the slow adaptation to customer needs and the profit-making aspect of the postal service in densely populated areas where private postal enterprises are in operation have meant that the postal market has been practically liberalized and that participation by private enterprises has reached significant levels.

Argentina, for example, has chosen to establish a free postal market with a private official post office. As noted in the last ILO report in 1991, the national post and telegraph enterprise, Encotel, enjoyed a quasi-monopoly of the postal services. This monopoly was progressively restricted in the 1970s with the arrival of franchise holders, which in exchange for the payment of a fee, and subject to certain operating conditions, had the right to share the postal monopoly with Encotel. The only difference between the franchise holders and Encotel lay in the obligation respecting the universal service, since the latter applied only to Encotel. With the franchise holders filling profitable slots on the market, Encotel's decline was rapid: its level of activities was cut in half between 1981 and 1991.

The public enterprise Encotel was replaced by the limited company Encotesa. Under Decree 265/97 the Government initiated the privatization process by granting licences in the postal services for a period of 30 years, in accordance with the provisions of the Act respecting the reform of the State (Act No. 23.696). In a typical expression of globalization, a number of foreign postal enterprises (Sweden, New Zealand, United Kingdom) showed interest in managing the postal services of Argentina. Following an international tender, in which four groups participated, the SOCMA-Banco de Galicia group was selected, with the participation, as an operational partner or technical adviser, of the official postal service of a UPU member (in this case, the British postal service). In Venezuela, over 500 companies are in competition with IPOSTEL (Instituto Postal Telegráfico de Venezuela), including DHL, Federal Express, UPS/Transvalcar, Domesa, Zoom/TNT. Market share, in terms of value, is divided up as follows: 40 per cent IPOSTEL and 60 per cent private couriers; in terms of participation: 75 per cent of items are forwarded by IPOSTEL and 25 per cent by private couriers.

In contrast to the vigorous deregulation undertaken in the North American telecommunications sector, examined below, the postal services in the United States are still provided by a monopoly, the United States Postal Service (USPS), a body attached to the federal Government. The USPS retains the exclusive right to deliver mail but, as in other countries, the services of international mail, parcels, express mail services and the delivery of periodical publications and advertising material are open to competition and a Bill before Congress could increase liberalization in the sector. Most of the large global integrators originated in the United States and they are still increasing their market shares to the detriment of the USPS and other national postal services.

As a significant aspect of the globalization and integration of the sector, the Emery enterprise has since 1995 signed transportation contracts with the USPS. In the spring of 1997, it also signed a contract with Emery Worldwide Airlines to run ten priority sorting and shipping mail centres for four years, located in the major cities of the East Coast, e.g. New York, Miami, Boston.

Asia-Oceania

The evolution of the post office in New Zealand is an example of the voluntarist liberalization of the postal services. Before 1987, New Zealand Post (NZP) carried out several activities, including the operation of postal, telecommunications and financial services (savings banks). Competition was encouraged by the establishment of private postal services on the express mail market. Remaining as a public enterprise, NZP has had to act as a commercial enterprise by offering new services, but closing down a number of post offices.

In 1994, the Government announced that it would introduce legislation to fully deregulate the postal market but political opposition against any further deregulation forced the Government to postpone its programme on this point.

In Japan, the Council for Administrative Reform recently proposed a partial privatization of mail distribution as well as savings and insurance activities. However, this proposal has been challenged by the Council of Postal Service and by the unions which have emphasized that the present system of public service should be maintained.

In Thailand, the Communications Authority of Thailand (CAT), a public enterprise established in 1977, is faced with competition from private enterprises and other public enterprises in both the reserved and unreserved service spheres. For example, in the parcel sector, its competitors are the Express Transportation Organization of Thailand and Thai Airways International.

According to information provided by the postal administration of the People's Republic of China at the UPU High-Level Meeting in Geneva in October 1997, the Chinese postal administration has adopted a number of measures regarding postal structural reform, market development, technical upgrading and infrastructure building. During the period from 1991 to 1995, considerable progress was made in all postal services, most of which maintained a double-digit annual average growth rate. The number of post offices increased from 54,006 to 61,898, a 2.91 per cent growth per year.

The development experience of China Post in the past 20 years, and especially in the last five years, can be summarized as follows:

  1. Postal development and reform require first and foremost postal personnel to adopt a more market-oriented way of thinking, breaking free from the outdated mode of regulation based on a planned economy, inefficient manual production and obsolete regulations; secondly, there is a need to foster a market economy and build a modern postal service by embracing new ideas and approaches that stress not only the quantity but also the quality of service, the achievement of better returns from investment, a range of more customized services and the creation of an environment in which China Post can both compete and cooperate with competitors.
  2. After its separation from the Ministry of Posts and Telecommunications in 1994, China Post was formally given legal status, with responsibility for the business management, network operation and infrastructure building of the national postal sector, in a major step towards separating the postal sector from telecommunications and the introduction of enterprise operations in the postal sector. The provincial postal administrations across the country have also made similar adjustments.

Europe

One of the earliest examples of restructuring of the postal services concerns the United Kingdom, where the separation of the postal and telecommunications services became effective in 1981. The postal service remains a national enterprise, although some of its activity has been opened up to competition, with its monopoly being limited to items below or equal to one pound sterling.

In 1986, the Post Office was divided into four autonomous bodies: the Royal Mail, the holder of the monopoly; Parcelforce, whose parcel transport activities faced stiff competition; the Post Office Counters, responsible for the Post Offices, and the Girobank. The latter was privatized in 1990 and the Post Office has now only three components of varying status, with the Royal Mail and Parcelforce being operational divisions of the Post Office.

A proposal to privatize the mail and parcel subsidiaries of the Post Office, whereby the subsidiary managing the counters would conserve its status as a public enterprise, was proposed in October 1994. In a Green Paper presented to Parliament, the Government reaffirmed the "non-negotiable commitments" of a reformed Post Office: the maintenance of a national daily distribution service for letters and packets everywhere in the country; a uniform and accessible price structure and a national network of counters remaining in the public sector. The reform would have led to a partial privatization of Parcelforce and the Royal Mail and the establishment of an independent regulator to ensure respect of the "non-negotiable commitments". The proposal was not pursued following opposition from the trade unions, public opinion and a number of Members of Parliament.

In Spain the Act of 27 December 1990 transformed the Directorate General of the Post and Telegraph services into an autonomous body of a commercial kind, the OACT (Correos y Telégrafos). This body is responsible for the management of basic mail services such as the collection, sorting, dispatch and distribution of letters. The OACT is endeavouring to reduce its costs, in particular through adjustments in the number of post offices and the reorganization of the universal service. It has therefore set up offices in rural areas which can be maintained by a contractual operator providing premises and a vehicle. The OACT is faced with stiff competition. The city mail market was liberalized as far back as 1959, which explains the presence of many Spanish courier enterprises.

In Sweden the post office monopoly, which goes back to the seventeenth century, was granted to Sweden Post, a public enterprise. In 1991, within the framework of its liberalization policy, the Government permitted the establishment, in the Stockholm region, of a private enterprise, City Mail. The mail transport monopoly was abolished in Sweden on 1 January 1993. At the beginning of 1994, the Post Office, a public operator, was transformed into a limited company with the State as shareholder: Posten AB. Currently not a single service provided by Posten AB is any longer protected by a monopoly or by a reserved service. The Swedish postal service must therefore face competition in all its sectors of activity. In June 1997 there existed 80 authorized postal operators, some of which cover only a limited portion of the territory.

Germany has embarked progressively on the path towards the privatization of its postal services. In 1989 the single postal administration in Germany was divided into three public enterprises (Postreform 1). With the amendment of the Constitution (article 87(f) of the Basic Law) and the enactment of a comprehensive package of legislation in 1994 the public enterprises were transformed into the joint stock companies Deutsche Post AG, Deutsche Telekom AG and Deutsche Postbank AG (Postreform II). Under Postreform III the telecommunications market was thrown open to competition as of 1998. The new Postal Act adopted on 11 December 1997 following intensive debate and based on a compromise reached in a mediation committee of Parliament and the Federal Council, lays down provisions which open up the postal market, with an enabling environment for sound competition being created through a regulatory framework and the issue of licences for certain services. Deutsche Post AG holds the exclusive licence until the end of 2002 for letters up to 200 grammes and Infopost(3) items up to 50 grammes. Under the Postal Act, the regulatory framework includes, inter alia, "consideration of social issues". In order to achieve this objective, the regulatory authority must reject an application for a licence if "facts justify the assumption that the applicant fails substantially to meet the essential conditions of work customary in the sector for which the licence is issued" (section 6 of the Postal Act).

Surrounded by Member States of the European Union which are pursuing the path of liberalization, Switzerland recently launched a reform of the administration of its postal and telecommunications services (PTT) which constitute an autonomous federal enterprise. The revision of the 1924 Act on the organization of the PTT is designed to provide greater leeway to La Poste and Telecom PTT in their financial management and personnel policy, and to facilitate cooperation with third parties (alliances). The PTT has been divided into two separate bodies: La Poste, a public enterprise and Swisscom, a joint-stock company in which the Confederation will hold majority capital.

In this way Switzerland joined, on 1 January 1998, the other European countries which have already made the separation. There will be two kinds of post offices: traditional post offices providing the usual postal services and selling financial products and related items such as envelopes, and other franchised post offices in grocery stores or "shops", as in the United Kingdom, or in offices of the respective commune. La Poste is required to transport letters and parcels weighing up to 20 kilogrammes throughout its territory. Without the maintenance of this measure, the trade unions believe that 1,000 local post offices could have been shut down. In addition to the maintenance of this monopoly, La Poste will distribute investment securities in partnership with the Swiss Bank Corporation with a view to opening up the distribution of financial products to competition.

Plans are also under way to restructure the postal services in other countries, such as Estonia, where it is intended to transform the Post Office (Eesti Post), currently a state enterprise, into a joint-stock company. More generally, the trend to establish separate postal companies in the Central and Eastern European countries and the CIS is being greatly accelerated by the liberalization of the telecommunications sector. Development of the telecommunications sector is largely supported by loans from the World Bank or EBRD. Usually the essential condition for such a loan is the separation of Posts from telecommunications. The privatization of telecommunications is possible only when telecommunications companies have been separated from Posts.

In conclusion, the postal services have so far been privatized only in a few countries, while initiatives to privatize mail services have been frozen or suspended in a number of other countries (e.g. Australia, Austria, Denmark, Germany, Japan, New Zealand, United Kingdom).

1.2  The structural and regulatory adaptation
of telecommunications operators

Since the appearance of the first telephone networks at the end of the nineteenth century and up to the 1980s, the telecommunications sector has been organized around a public monopoly. But technological changes and the globalization of telecommunications networks are leading many countries to open up this sector to broad competition and to make use of private management techniques.

1.2.1  A strategic sector of economic globalization

As a driving force of research and development and as a result of its impact on the competitiveness of the economy as a whole, the telecommunications sector has become of increasingly strategic importance.

According to the International Telecommunications Union (ITU), the growth of the world economy will now to a large extent depend on the development of the telecommunications industry. This market is expected to develop rapidly in the coming years and reach a volume of activity worth some $1,200 billion in the year 2000. At present, the total sales of telecommunications goods and services are around $800,000 million, three-quarters of which come from services. The ITU estimates at 7 per cent the annual growth in the telecommunications sector, i.e. twice that of world economic growth. This sector therefore ranks third in the world in terms of market capitalization, after the health and banking sectors, and its privatization thus offers very significant opportunities for investors.

Technological change, liberalization and globalization have become the decisive factors in the development of the telecommunications services markets. The arrival of new participants is intensifying competition and leading to the rapid transformation of the status of national public monopolies. The wave of alliances and collaboration between operators in recent years is progressively structuring the market around large international blocs.

By encouraging a diversification in supply and the appearance of new demands from consumers, technological changes have called into question the traditional organization of the sector. The appearance of digitization techniques and the development of computerization have led to a multiplication in telecommunications services (audio and video conference facilities, videotext, remote consultation of databases, local networks, the Internet, etc.). Between 1992 and 1997, the number of Internet users rose from a few thousand to several tens of millions and is expected to reach several hundreds of millions after the year 2000. This "network of networks" thus heralds the famous "information highways". The use of fibre optics results in significant economies of scale allowing thousands of simultaneous communications on a single support, opening up the way to a series of new services (transfer of calls, voice mail, identification of calling numbers, detailed billing).

The development of alternative infrastructure (cable, satellite, electro magnetic waves for mobile telephones) has also encouraged the diversification of the supply of services by calling into question the concept of a "natural monopoly" on transmission infrastructures. It is much less expensive to serve users in low population or out of the way regions by Hertzian waves than by a subsidiary network. Satellites are also making it increasingly possible to propose new services without recourse to traditional networks. For all these reasons, an organized oligopolistic competition is tending everywhere to replace the monopolies of the "traditional operators".

This diversification in supply in turn leads to changes in consumer needs, in particular among enterprises, requiring new personalized, international and high-quality services. Thus the share of international traffic in the communication budget is higher than 30 per cent in 40 per cent of major European enterprises; and 83 per cent of them want a range of services provided entirely by a single operator.

This technological factor should remain preponderant in the coming years with the development of online services and the Internet. All the major telecommunications operators are focusing on markets linked to these services. Thus the Japanese public group NTT will propose Internet services in several Asian countries and envisages offering telephone and advertising services through this global network. In 1997 NTT also acquired a share in the capital of Asia Internet Holding, an Internet server operating in Asia.

The globalization of networks has highlighted the increasing lack of adjustment in the monopolistic structure. The interconnection of national infrastructures has enabled some enterprises to develop bypass strategies in the long-distance communications sphere against which the monopolies are powerless to act. The call-back system allows the difference in national rates for international calls to be exploited, even in the absence of any legal opening up of markets. Initially used by small (in particular North American) enterprises, the call-back system is now attracting the attention of such giants as AT&T. In Brazil, for example, one long-distance call out of ten is paid for in the United States.

Given the new structure of the sector, the monopolies no longer appear in the best position to meet a more individualized demand for increasingly complex services at competitive rates. In the member countries of the OECD, the telecommunications market is already very far from being the highly compartmentalized monopolies which existed before 1985, even if the traditional operators remain the main actors on the market.

The number of new participants is very high. In the telecommunications services field, several small enterprises are now successfully competing with the major operators due to their range of very personalized services. Furthermore, the telecommunications market is attracting major groups whose main activity is less focused on telecommunications and which have major financial resources to invest. This is the case of the German industrial conglomerates (VEBA, VIAG, Thyssen, Mannesmann), electricity distribution companies in Japan, the Netherlands or Spain (Endesa, Union Fenosa ) and water distribution companies in France (Générale des Eaux, Suez-Lyonnaise des Eaux, Bouygues). Finally, enterprises with alternative network infrastructure which can be used to provide telecommunications services are endeavouring to develop them, as in the case of railway companies (Deutsche Bahn in Germany, Ferrovie dello Stato in Italy, the SNCF in France, Japanese railway enterprises), gas distribution companies, highway enterprises or cable operators.

In addition to these major developments, international alliances are being concluded and collaboration being developed between enterprises. Indeed, the major operators need international partners to provide the global services demanded by their major clients (multinational enterprises). These strategic alliances are a typical expression of the globalization of the economy and one of the causes of the privatization (at least partial) of the traditional operators.

These are in fact triangular alliances established between West European, North American and East Asian operators, with a view to their progressive expansion to other regions of the world.

1.2.2  The adaptation of operators to the global market

As in the postal services, it would appear useful to recall a few historical events to facilitate an understanding of the current phenomena of demonopolization and globalization.

From the end of the nineteenth century, all the industrialized countries began to construct their national telephone networks which, because of their strategic importance, have in the past been frequently managed by the public authorities. Considered as a modern means of communication between individuals, telecommunications were for a long time associated with the public postal services. Whereas the postal services lost money, the telecommunications services often made a profit and became a source of subsidies for selective activities in many countries. Progressively, however, telecommunications were separated from the postal services. But whereas the movement towards autonomy and corporatization of the postal services is progressive, the national telecommunications operators are a privileged target for privatization, or at least for the controlled opening up of the capital of the operators. As will be seen below, this difference in the pace of regulatory and structural change in the postal services and communications has important and often different consequences for employees, who in many cases have previously had a common status.

1.2.2.1  The beginnings of liberalization

Several countries adopted a voluntarist policy of deregulation/re-regulation of telecommunications services from the beginning of the 1980s. The movement towards the restructuring and opening up to competition of the telecommunications monopolies appeared first of all in the United States, where, in contrast to Europe, the development of telecommunications networks had been undertaken by private enterprises, over which the State never had any control. Despite anti-trust legislation, telephone services for a long time remained a de facto monopoly.

In 1982, the United States courts ordered AT&T, which at that time was almost the only and main constructor of telecommunications equipment, to separate its long-distance and local activities. The United States was divided into 164 Local Access and Transport Areas (LATA); any intra-LATA service was deemed local and any inter-LATA service considered long- distance.

The dismantling of AT&T resulted in the creation of seven regional companies (Regional Bell Operating Companies (RBOC)), with a de facto monopoly on their respective territory in which they provide long-distance services. This division was intended to promote as broad a competition as possible within the spheres in which AT&T was in a dominant position. An increasing number of liberalization measures followed. Other international scale operators appeared (such as MCI, Sprint and Worldcom). The regional companies, as well as MCI and Sprint, launched activities to increase their growth abroad. Ameritech and Bell Atlantic, for example, acquired Telecom of New Zealand and Bell South, in an alliance with Cable & Wireless, took over control of Australian Aussat in 1991.

The United States Congress intervened only at the end of the process, with the Telecommunications Act of February 1996, to establish the conditions for genuine competition on the local domestic markets by eliminating entrance barriers, opening up of the market to cable operators, gas and electricity distributors and establishing the obligation to ensure interconnection and access to infrastructures. Today in the United States there are more than 500 providers of telecommunications services.

In the United Kingdom, it was the degradation of the telephone service which led to the liberalization of the market. After separating postal and telephone services in 1981 the Conservative-led British Government organized competition. In particular, the private enterprise Mercury was made responsible for creating a telecommunications network to compete with that of British Telecom (BT), the public operator privatized in 1984. In 1991, this asymmetric duopoly (the dominant position of BT having scarcely been reduced) was abandoned in favour of the complete liberalization of the market, including for voice mail. Since then, dozens of operators have entered the market. Cable operators have managed to develop an alternative network to that of BT.

The structural and regulatory developments which have taken place in the United States and the United Kingdom have influenced, from the middle of the 1980s, a number of other countries, with these developments accelerating towards greater liberalization throughout the 1990s.

1.2.2.2  The global wave of deregulation

This basic tendency follows a common global pattern, even if the degree and pace of liberalization vary. The following examples, collected from data available by region, illustrate the increasing convergence at the world level of structural and regulatory change in the telecommunications service sector.

Asia-Oceania

In Asia-Oceania there is a low degree of homogeneity in the pace of structural changes in the liberalization of telecommunications services, due to the very large diversity of this region. Structural models range from such mature and competitive markets as those of Australia and Japan (NTT is the leading worldwide operator) to sectors totally controlled by the State (Viet Nam), as well as private services (Singapore) and mixed public/private systems (as in India, the Philippines or Malaysia).

In Australia, the traditional operator Telstra is a public enterprise. As in the case of many countries, Telstra has ceased to be a manufacturer of equipment and has concentrated on services, in an attempt to make its organization less hierarchical and less bureaucratic in response to new customer demands. As pointed out in the ILO report on this sector in 1991, since the beginning of the 1990s the Government is trying to deregulate the market to improve services and allow Australian operators to enter the Asia-Pacific markets. In 1991 a second operator (Optus) appeared, in particular on the long-distance telephone market and purchased the public operator of satellite communication services. The British company Vodaphone has been authorized to provide mobile telephone services. The telecommunications services market should be more completely opened up in the years to come.

In Japan, 1985 saw the partial privatization of Nippon Telegraph and Telephone (NTT) which held the monopoly of domestic telephone services. At the same time, Kokusai Denshin Denwa (KDD) was opened up to competition in the field of international communications. The law prohibited NTT from offering international services and KDD from proposing national services. A number of new participants appeared, reducing the market shares of NTT. In 1994, 111 enterprises had their own network and almost 2,000 companies provided telecommunications services. Even so, NTT retained a de facto monopoly over local services and still had a 70 per cent market share for long-distance services.

The restructuring of NTT was decided in December 1996. In 1999 a holding company will control three subsidiaries: two local operators, NTT West Japan and NTT East Japan, and a long-distance operator. In taking over the public service functions of NTT, the two local operators will be governed by a special legal statute.

The long-distance company will be governed by common company law and will thus be able to invest in telecommunications services abroad. It will compete with KDD, IDC and ITJ (International Telecom Japan), which is likely to merge with Japan Telecom.

In China, since 1992, mobile telephone, radio-paging and data transmission by satellite services have been opened up to competition. The China Unicom company was authorized in 1993 to compete with the traditional operator China Telecom in all segments of the telephone services market. A number of joint ventures have also been concluded with foreign enterprises to speed up the construction of infrastructure.

In Malaysia, a telecommunications company (Syarikat Telekom Malaysia Berhad -- STM) was established in 1984 on the basis of the Department of Telecommunications. Telekom Malaysia was partially privatized (24 per cent of the capital) in 1990. The telecommunications sector was liberalized in 1994, and eight companies were authorized to compete with Telekom Malaysia. As a result, Western investors (such as Deutsche Telekom, Swisscom and US West) are now present. With South Asia, Africa is the region in which Telekom Malaysia is concentrating its expansion efforts. The company has already acquired 60 per cent of SOTELGUI, the public operator of Guinea, 30 per cent of Telkom South Africa jointly with SBC Communications and 30 per cent of Ghana Telecom. In Thailand, the Government recently approved a telecommunications master plan that should pave the way for the gradual privatization and liberalization of the country's telecommunications sector.

In India, the Government decided to separate the postal and telecommunications services by creating the Department of Telecommunications (DOT). In 1986, the telephone administration of Bombay and New Delhi was transformed into a public enterprise (MTNL), and the international telecommunications services converted into another enterprise (VSNL). The DOT provides local and long-distance services outside the area serviced by MTNL. Competition is authorized in the value added services such as electronic mail, transfer of data, videotext and video conferencing. Eight mobile telephone licences have been granted for cities (New Delhi, Bombay, Calcutta and Madras). In 1994, the Government announced a new telecommunications policy based on the liberalization of local telephone services, before that of international and long-distance services. A specialized regulator was established in 1996.

In Pakistan, the Department of Telegraphs and Telephones has been transformed into a commercial enterprise (Pakistan Telecom), the total privatization of which is envisaged. In Sri Lanka, the restructuring of the telecommunications sector began in 1990. A specialized regulator was set up and the traditional operator is a public enterprise with 7,800 employees. Thirty-five per cent of its capital was transferred to the Japanese NTT in the summer of 1977, in what was the second largest privatization operation in the country. The value added services and mobile telephone services have been privatized.

Israel's domestic telecommunications network will be thrown open to competition by January 1999 as part of the Government's plans to lower prices and dismantle monopolies. However, investors will have to build their own infrastructure since Bezeq, the state-controlled telecom company, will not be obliged to place its network or facilities at the disposal of competitors. These measures follow the Government's successful liberalization of international telephone services under which the cost of calls fell by more than 75 per cent and Bezeq's market share fell by half. The State holds a 62 per cent stake in Bezeq.

The Americas

In the Americas, telecommunications services in the 1990s have followed the path of privatization and liberalization.

In Canada, the telecommunications services have been historically provided by the private sector. Before liberalization, the services were organized through regional and local monopolies, with most of the large enterprises providing local and long-distance services (Bell Canada, New Brunswick Telephone, Manitoba Telephone). Liberalization began in 1991 with the opening up to competition of long-distance services, in particular to the benefit of United States firms. Liberalization was further extended recently to local services, in particular to the advantage of cable operators.

In Brazil, the local telecommunications market is still dominated by Telebras, which groups together the 28 operators of the federative states, and Embratel, the long-distance and international operator. Mobile telephone franchises are being prepared. Following a revision of the Constitution authorizing privatizations, a Bill proposes privatizations in this sector and the establishment of an independent authority. The Government plans to restructure the subsidiaries of Telebras into five or six regional companies before privatization. The privatization of the mobile telephone sector seems to be imminent.

In Mexico, up to 1988, the supply of telecommunications services was the monopoly of Telmex and the Directorate General of Telecommunications (DGT), which depended on the Ministry of Communications and Transport. In September 1989, the Government announced the partial privatization of Telmex.

The volume of cross-border traffic between the United States and Mexico is the second highest in the world. The settlement rate between Telmex and United States carriers has been a major source of income for the Mexican company. Since 1990, these rates have fallen by 50 per cent. Telmex applied for a licence to provide long-distance services in the United States in February 1997, requesting reciprocity after Mexico opened its long-distance market to international carriers. The United States Federal Communications Commission approved Telmex's request for a licence, but required in return that Telmex lower the settlement rate it charges United States carriers to complete calls inside Mexico.

In Argentina, telecommunications reform has been under way since the beginning of the 1990s. As noted in the last ILO report in 1991, the Entel telecommunications service was divided into two companies, one serving the north and the other serving the south of the country. After privatization, the new companies were bought by multinationals. The market is still dominated by a duopoly consisting of Telecom Argentina (linked to France Telecom and the Italian Stet) and Telefónica de Argentina (linked to the Spanish Telefónica Internacional in particular). The two companies should become mutual competitors.

The same report pointed out that privatization in Chile began in 1988. The market which was opened up without restriction to foreign investors has become very competitive. The Spanish Telefónica is majority holder of the traditional operator CTC (Compañía de Teléfonos de Chile). The former public enterprise providing long-distance telephone services, Entel, is controlled jointly by the Italian Stet and a Chilean group. Seven other long-distance telephone operators are active and an extension of competition through cable television operators is now appearing.

In Venezuela, the traditional operator CANTV (Compañía Anónima Nacional de Teléfonos de Venezuela) has been privatized up to 49 per cent. A regulator (Conatel) was set up and licences awarded to mobile telephone operators.

Africa

In Africa, despite specific circumstances, there is a trend towards convergence with the rest of the world, with a separation of postal and telecommunications services, their transformation into enterprises, privatization, and the liberalization of mobile telephone services. Various countries have begun to privatize partially their telecommunications services (Ghana, Côte d'Ivoire, Cape Verde, Guinea, Senegal). A dozen or so operators have established joint enterprises with foreign operators and three countries authorized competition with the national operator (Ghana, Nigeria, Namibia).

In Botswana, the Government has significantly improved the telecommunications infrastructure without recourse to privatization. This country has a totally digitized network with a teledensity of 3.1 lines per 100 inhabitants (almost four times the average for sub-Saharan Africa). The telecommunications enterprise of Botswana (BTC) manages the network in collaboration with the British Cable & Wireless, an operator firmly established in the Commonwealth.

In sub-Saharan Africa, despite budgetary difficulties, liberalization is in line with the global movement of privatization and integration into the global telecommunications infrastructure. Average teledensity is less than one telephone line per 100 inhabitants, with most of the lines concentrated in urban areas. Furthermore, the lack of technical staff and expertise means that employees trained in new technologies may well become expatriates, by moving in particular towards the Middle East. Restructuring is looked upon with scepticism in some African countries since privatization and liberalization necessarily involve a loss of income for States and a reduction in the volume of public employment. However, liberalization is being increasingly regarded as the only way of attracting the necessary foreign capital for the development of telecommunications, with privatization being furthermore a means of resolving the problem of debt. Forty-one per cent of African countries have telecommunications services run by ministries and 28 per cent by public enterprises.

The Government of Senegal decided to privatize 66 per cent of the National Telecommunications Company (SONATEL) in 1997. Thirty-three per cent of the capital was acquired by France Telecom, with the same proportion being sold to private Senegalese investors including 10 per cent to the staff and from other countries of Africa. SONATEL is considered as one of the most competitive telephone operators of Africa. It has a network of 100,000 subscribers, one of the highest density rates in sub-Saharan Africa. Three hundred thousand new telephone lines are expected to be established within the next ten years. Competition in mobile telephone services could be opened up in 1998.

The Government of Egypt decided in December 1997 that Egypt Telecom is to be transformed from an administration under direct ministerial control into a state-owned corporation with greater autonomy. Egypt Telecom is expected to undergo extensive restructuring with a view to its privatization. The Government also decided to allow a second mobile phone service. It will operate in competition with the recently established Egyptian Mobile Telephone, which is to be fully privatized.

In South Africa, an independent regulator of telecommunications services was set up in 1997, and operating licences for value added services have been established. The national telephone company is currently being privatized and three mobile telephone operators should shortly become competitors.

Europe

In Western Europe, the efforts towards liberalization are, as in the postal sphere, coordinated by European institutions (see 1.3 below). There is thus a certain degree of structural and regulatory homogeneity. The British precedent is often a point of reference on the continent even if the principle of subsidiarity allows for relatively varied models.

In Spain, the Compañía Telefónica Nacional de España (CTNE) was established in 1924 and changed its name to Telefónica in 1984. The company, which is now 100 per cent private, is very present in Latin America. The Spanish public authorities would like to see Retevisión, a company which transports television signals, become the leading competitor of Telefónica. To this end, Retevisión was sold in August 1997 to the Spanish electricity company Endesa and the Italian Stet with the Spanish Government granting a telephone service licence to this new operator.

In Italy, although the State issued the first telephone service licences as far back as 1881, the development of the services began only later. In 1925, to avoid the establishment of a monopoly, the national territory was divided into five zones with five service companies. The monopoly was established at the beginning of the 1960s around the Stet group, which bought the franchise companies. The Stet group is itself controlled by the public holding IRI (Istituto per la Ricostruzione Industriale). In 1992, a new Act reorganized the Stet with a view to specialization and internationalization, resulting in the establishment in 1994 of Telecom Italia, through the regrouping of several public enterprises. Telecom Italia is organized into six commercial divisions (mobile telephones, services, residential clients, professional clients, international services, networks and logistics), each of which comprises territorial subdivisions. Telecom Italia became fully privatized in October 1997. A strategic corporation agreement was signed on 2 July 1997 with AT&T.

It is interesting to note that unlike the multiplication of operators often occurring in other countries, the Italian authorities have restructured the telecommunications activities through a single managing body which is a major international operator.

In Sweden, the operator Telia, a limited company owned 100 per cent by the State, has never had a legal monopoly and its dominant position was challenged only recently as a result of the spectacular development of mobile telephone services. Telia lost 25 per cent of its market share in the international telecommunications sector and 7 per cent in that of long-distance telephone services. Telia is organized into three major parts: operating units, support units and peripheral markets units.

In Finland, the market is dominated by three major competitors: the association grouping together the 46 local companies, the public enterprise Telecom Finland and Telivo, 70 per cent of which is held by the Swedish public operator Telia. Telecom Finland is still attached to Finland Post, and privatization could shortly affect the postal as well as the telecommunications operator. The new Telecommunications Market Act of June 1997 defines conditions of market dominance and the obligations of the leading carriers.

In Norway, competition on the mobile telephone market was opened up in 1990. Most of the new participants, based abroad, are larger than Telenor, the national operator resulting from Norwegian Telecom.

In Germany, Deutsche Telekom was transformed into a commercial company in 1995. Its legal monopoly was abolished in 1996, allowing any operator to provide basic services, access the network of the traditional operator and connect up its own network.

A first stage in the privatization of Deutsche Telekom took place at the end of 1996, and a second will follow in 1998. It was planned for the State to remain the majority shareholder, at least until 1999, but as a result of budgetary requirements, the original date was brought forward to 1998. In the competitive sector, subsidiaries have been established (DeTe Mobil for mobile telephone services and DeTe Medium for multimedia). Deutsche Telekom is gradually expanding at the international level (China, Czech Republic, Hungary, Indonesia, Malaysia, Poland). New operators are appearing on the market as a result of the search for diversification by industrial groups operating in particular in the energy sector (RWE and VEBA for example, with their subsidiary OtelO). A new regulatory body has been set up to oversee the telecommunications sector.

In France, the privatization process of France Telecom, which was delayed several times, took place in the autumn of 1997. Initially, 20 per cent of the operator's capital had been quoted on the stock exchange in October 1997; an increase in capital will be launched, as well as an exchange of participation with Deutsche Telekom. A Telecommunications Regulatory Authority (ART) was established in 1996 to examine disputes relating to interconnection and access to networks, with a view to preparing for the total opening up of the market as of 1998. The financial and industrial alliance concluded in September 1996 between British Telecom, the United States Southwestern Bell (SBC), the German Mannesmann and the Compagnie Générale des Eaux led to the establishment of another global telecommunications operator in France: Cegetel.

The transition countries of Central and Eastern Europe have been closely following the liberalization process in Western Europe. Considerable investments are being made to enable them to catch up with the telecommunications equipment level of Western European countries. In 1998 Poland will float 25 per cent of the capital of its national operator Telekommunikacja Polska (TPSA) on the stock exchange and will subsequently open its capital to a partner. In Romania, the national Rom Telecom company is due to be transformed into a commercial company before the opening up of its capital to a strategic partner. Privatization should take place in 1998. Similar developments should take place in other Central and Eastern European countries.

In the Russian Federation, in 1992, the Government decided to dismantle the former state company Intertelecom in order to foster privatization, investment and competition. International and domestic long-distance operations were combined into a new joint-stock company called Rostelecom. The local telecommunications assets and operations were divided into 87 independent, regional joint-stock companies. Eighty of these companies were to serve their own regions, while seven companies were allocated key metropolitan markets such as Moscow and St. Petersburg. All these companies including Rostelecom were partially privatized in 1993 and 1994. In June 1995, a second long-distance and international carrier was created by capitalizing the State's 51 per cent interest from each regional telecommunications operator into one holding company, Sviazinvest. An initial 25 per cent stake of this holding was sold in July 1997 to a consortium of Russian and international financial institutions.

The long-distance and international telephone market is still dominated by Rostelecom, which remains 38 per cent state-owned through Sviazinvest. Mobile telephone licences have been granted for a rapidly expanding market. One of these new operators, Vimpelcom, was the first Russian company to be quoted in 1996 on the New York stock exchange. Finally, there are some 15 virtual operators using alternative infrastructures such as railway, gas and petroleum distribution networks.

In the Czech Republic, 27 per cent of the capital of the national operator SPT was sold in 1995 to a Swiss-Netherlands consortium. Although the traditional operator retains its monopoly over international and intercity communications, local networks are open to foreign operators, in particular in the poorly served peripheral regions, in an attempt to encourage the investment of foreign capital in the construction of the network. In the same way, mobile telephone services, already provided through the intermediary of Eurotel (a joint venture between the Czech operator and US West/Bell Atlantic), have been developed with the granting in 1996 of an operating licence to an international consortium.

In Hungary, it is long-standing practice to resort to private funds to promote the development of infrastructure. In the 1980s, the holders of bonds issued by the Hungarian Post Office were granted the right to acquire a telephone line on a priority basis. The Hungarian telecommunications company Matav was separated from the Post Office on 1 January 1990 and partially privatized (30 per cent of the capital is held by a German-United States consortium). Its geographical service area has been reduced by 25 per cent by the Government to encourage competition based on the choice left to local operators to form alliances with other enterprises. Matav has an exclusive right to operate long-distance and international voice telephone services up until 2001. Mobile telephone operators have appeared, such as Westel Radiotelefon (a joint venture with US West Holland and IFC) and Pannon. Plans to create a second national carrier have been recently outlined by the Government.

1.3  The European Union's policy for the liberalization
of postal and telecommunications services

Because of its original regional integration procedures, the European Union and the States which are associated under various agreements (Treaty on the European Economic Area, the so-called pre-adhesion European Agreements) form a coherent pole for the programmed liberalization of the postal and telecommunications services. A number of initiatives have been taken in this sphere by European institutions.

As regards the historical process of decompartmentalizing national markets to establish an economic area without internal frontiers, mention will be made here of only the main decisions which have and will have significant repercussions on the structures of operators and the management of human resources.

Since the beginning of the 1990s, the European Commission has given particular impetus to its policy for opening up to competition certain sectors traditionally subject to a monopoly, and in particular, the telecommunications and postal services. The sectors are in fact essential to individual consumers, the competitiveness of enterprises and employment policy. According to the European Commission, the efficiency gains resulting from a certain degree of competition should in the end have overall positive effects for European society.

The liberalization of the postal and telecommunications sectors does not require the privatization of public enterprises, which will remain active. European law is in effect neutral as regards the public or private character of enterprises.

1.3.1  The EU approach to telecommunications

The opening up of the markets has been gradual, based on a precise timetable, and has resulted in the adoption of a series of directives by the Commission and the Council of Ministers.

Initially, from 1987, attention was focused on telecommunications terminals (telephones, modems, fax machines). On 1 January 1993, data to transmission services were opened up to competition.

A directive of 18 October 1995 authorizes the use of the cable television infrastructure for the provision of already liberalized telecommunications services. A directive of 16 January 1996 concerning the liberalization of mobile telephone services seeks to ensure an equitable level of competition both in the granting of licences to operators and the management of mobile telephone networks, in order to encourage the arrival on to the market of new participants and facilitate the interconnection of national networks. On 1 July 1996, alternative infrastructures (railway networks, highways, distributors of energy, etc.) were opened up to competition, as were voice telephony markets and infrastructures on 1 January 1998. This liberalization of voice telephony is not taking place at the same pace in all Member States, even if all are making considerable efforts to be ready at a date as close as possible to 1 January 1998. States which have less developed or smaller networks will be given an additional and variable adaptation period.

1.3.2  The EU approach to the postal services

Unlike the approach used for the telecommunications services, liberalization in the postal sector is being introduced cautiously. The European social partners have contributed to making the long-term guarantee of the universal postal service at the heart of the proposed arrangements. A directive resulting from an agreement dated 18 December 1996 was adopted on 1 December 1997, the main provisions of which are as follows:

These regulations reflect the spirit of the jurisprudence of the European Court of Justice, whereby the perimeter of the postal monopoly may include profitable and non-profitable activities, with a view to guaranteeing the financial equilibrium of national post offices. This principle appears to inspire the liberalization of the postal services, including outside Europe.

1.4  The multilateral framework: Agreement
on the international liberalization of
telecommunications services

Concluded within the framework of the WTO on 15 February 1997 after many months of negotiations, this important agreement confirms the globalization of the telecommunications sector, and indirectly that of the other economic sectors, since all are in all one way or another linked to the growth of telecommunications services. The agreement covers the total opening up to competition of service markets as varied as fixed telephones, telex, satellite transmission, paging, digitized data transmission or cellular/mobile telephone services. This world market, estimated at US$670 billion in 1996, is increasing by around 10 per cent a year. According to Telegeography 1997-98, an annual survey of the global telecom markets, the world spent 70 billion minutes talking internationally on the telephone in 1996, a 13 per cent rise on the previous year.

Although the opening up of telecommunications services markets to competition has already been decided in the European Union and the United States, the agreement is particularly innovative as regards the rest of the world. It in fact marks the progressive end of monopolies over telephone services: each operator should be able to propose services freely in countries other than the country of origin. In the same way, each operator should be able to acquire a majority participation (except by derogation) in the capital of foreign counterparts. The abolition of entry barriers to the markets concerned and the disappearance or reduction of thresholds imposed for acquisition of participation in national companies open up new prospectus for growth for the major telecommunications services enterprises. The support for the multilateral pact is widespread since the 68 signatory States account for more than 90 per cent of the turnover in the world telecommunications market.

With this agreement, the WTO has contributed to strengthening the outlook for rapid development of the information society. The United States President has furthermore seen it as a decisive step towards the establishment of a global information infrastructure. A commercial framework for the globalization of information services will therefore be gradually established, with the agreement on telecommunications services complementing the effects of the information technologies agreement also concluded within the framework of the WTO. This last mentioned instrument provides for the dismantling of customs tariffs on 1 January 2000 on 500 products (computers, fax machines and other telephone equipment, computer peripherals, semi-conductors, etc.).

Over time, the agreement should result in a reduction in the cost of international calls, one of the driving forces of the globalization of the economy. To the extent that it attenuates the concept of frontiers, it should prove beneficial for all operators which have negotiated global alliances.

1.5  The social dimension of the new
forms of regulation

The liberalization of the postal and telecommunications services requires the establishment of new forms of regulation or control of the smooth functioning of markets by the public authorities. A re-regulation is necessary after the deregulation of the monopolistic sector. The imperfections of the liberalized market justify a new regulatory framework to correct market mechanisms and impose public service obligations.

After a brief review of the role of communications in social and economic development, the following sections focus on the social aspects of regulation, to which the social partners are particularly attached, namely the defence of consumers, the control of tariffs and the respect of the new universal service.

1.5.1  The role of communications in social and
economic development

As already noted the postal and telecommunications services have historically played a very important role in strengthening national cohesion. In all countries they continue to be a driving force of social and economic development. As the 1991 ILO report on this sector pointed out: "the post -- with its thousands of post offices and delivery rounds throughout the world -- plays a not inconsiderable role in society and even in national and regional development; awareness of this seems to have put a stop to the tendency that once existed to cut down on postal establishments".(4)

Telecommunications are a key element in economic development since they represent an essential infrastructure which is likely to significantly increase productivity and efficiency in agriculture, industry and in services. For this reason this sector is today considered a priority one in many developing or transition countries. The new technologies, such as mobile telephones or the Internet, offer perspectives for development which were not conceivable a few years ago. Structural and regulatory changes occurring in the developing countries take account of the opportunities for catching up with the more developed countries, thanks to these new technologies and the outlook for external growth for international investors. The major operators present on saturated domestic markets, which have large financial and technical resources, tend to invest in countries where supply is insufficient or where the outlook for profits is considered attractive.

Encouraged by the international financial institutions, in particular within the framework of structural adjustment plans, and by the governments of many countries, the movement towards the privatization of telecommunications is a counterpart of the liberalization developing throughout the world as a whole. A consortium led by a subsidiary of France Telecom has thus purchased 51 per cent of the capital of Citelcom, the telecommunications company of Côte d'Ivoire. In Peru, the Spanish operator, Telefónica, was entrusted with the privatization -- and the co-management for five years -- of the public Peruvian operator in 1994, and the Italian Stet-Telecom Italia played a similar role in Bolivia. Similarly, Canada Post, Deutsche Post and the Royal Mail have all expressed an interest in running the Trinidad and Tobago Postal Service under a World Bank-financed management contract.

According to the ITU, in 1996, the privatization of public operators represented US$22,000 million, including US$9,500 million of foreign investment. The Worldtel project was launched in 1995 by the ITU to guide private investment flows towards telecommunications in the developing countries. Despite the progress achieved through modernization and the connection of new subscribers, the average teledensity in the low income countries was only 1.48 lines per 100 inhabitants, compared with 52 lines per 100 inhabitants in high income countries. Telephone lines are concentrated in large cities and the telephone is still unknown in many poor or isolated regions, in particular in Africa. The average waiting time for a telephone line in low-income countries is six and a half years, and in many countries it is more than ten years.

1.5.2  The social aspects of the regulation of
postal and telecommunications markets

Experiments in market liberalization (mass mailing, parcel services) are often difficult to reconcile with the obligations of providing a public service and the levelling out of rates: the public authorities generally participate in the fixing of postal charges.

The "levelling out" of charges can be understood as any operation consisting of applying a fixed charge, irrespective of the cost price, to several categories of users. In addition to the geographical levelling out of charges (distribution costs in rural areas are higher than in urban areas and sorting and logistical costs vary according to the distance between the sender and recipient), there is often equalization between customers of different sizes (the mail of enterprises is often easier to process automatically than that of private households). In this way the public authorities are able to keep prices at reasonable levels irrespective of the user or recipient of a postal service. For these reasons, when new participants are authorized to operate in certain markets previously located within the perimeter of the monopoly, they choose to focus on a specific niche, i.e. on market segments which generate lower production costs than the average costs of the traditional operators. It is then that greater financial difficulties may arise for national postal services along with complex questions concerning the financing of the universal postal service. Thus, in the United States, the global integrator, UPS, sees the United States Postal Service as a major rival for residential and commercial parcel delivery services. Consequently, it has regularly sought to defend its interests with the Postal Rate Commission -- the federal governmental agency with the authority to recommend domestic postal rates. The company's strategy in these proceedings is to maintain that the rates of the United States Postal Service, particularly for first-class mail, are higher than the cost of providing those services and that surplus revenues are being used to subsidize, inter alia, the express mail and parcel delivery services with which UPS competes.

In the postal sphere, other States have like Germany also set up a specialized regulator. In Argentina the postal market is regulated by the National Commission of Posts and Telegraphs (CNCT), which is responsible for monitoring compliance with the regulatory framework newly established, in particular, guaranteeing the existence of an open and competitive market, as well as the maintenance of quality in services. But in many cases, the postal regulators are still the ministries on which the operators depend or from which the latter have been detached.

Unlike postal services, telecommunications are a veritable testing ground for new forms of regulation. In this sphere, regulators often have a threefold role: the determination of the conditions of entry into the market, the guarantee of public service functions (including a universal service) and the respect of competition rules.

The existence of a specific regulator for telecommunications has become necessary in many countries in the context of liberalization. It is distinct from the competition authorities and has the task (theoretically for a transitional period) of leading the market from a monopoly to a competitive mechanism.

The control of charges and consumer protection are crucial aspects of good regulation, one of the positive effects of the opening up of markets being the reduction in rates.

In the United States, it is the Federal Communications Commission (FCC) which controls the rates of AT&T and other telecommunications companies. In the United Kingdom, the Office of Telecommunications (OFTEL) has established a mechanism for monitoring British Telecom rates and the Director General of Telecommunications grants operating licences to other operators, ensuring a balance between the protection of consumers against excessive increases and the maintenance of sufficiently high prices to encourage competition and innovation.

In other countries, regulation authorities often also exist or have been planned, directly responsible for monitoring rates or playing a more indirect role (fixing of charges for connections to the network of the traditional operators).

There would seem to be a fairly strong correlation between the degree of opening up to effective competition and the evolution of charges. Thus within the OECD between 1990-94, professional and residential rates dropped respectively by 8.6 and 3.1 per cent in the countries opened up to competition, whereas the former fell only 3 per cent and the latter increased by 8.7 per cent in countries where the monopoly of the traditional operator over voice telephony has been maintained.

However, the global effect of liberalization leads to an increase in the cost of rental charges and local communications, whereas the cost of inter-urban and international communications has often fallen significantly. This aspect is generally emphasized by the trade unions, particularly since the effect of the readjustment of rates on access to the telephone by the most modest categories of the population (in particular as a result of the increase in the cost of subscriptions) is still not very well-known. In Africa, pricing is a very delicate problem. Telephone charges are higher than in other regions, but most operators are reluctant to reduce the cost of international services because many governments use the income from this sector to subsidize national services or other sectors.

1.5.3  The definition and respect of the universal service

The social dimension of the new forms of regulation is above all taken into account through the concept of "universal service".

Invoked in 1909 to back up the AT&T monopoly against growing competition, the concept of "universal service" was used in the opposite way to justify the dismantling of AT&T in 1982. On that occasion it was considered that technological innovation ensured a better provision of the universal service within a competitive framework.

At the world level the universal service has been recognized as an essential element. The special G7 Summit on the information society which was held in Brussels in February 1995 confirmed this. The ministers present emphasized that the guarantee of universal service and universal access to services were crucial to achieving their joint vision of the information society.

In October 1997, the Director-General of the International Bureau of the UPU, Mr. Thomas E. Leavey, in addressing a high-level UPU meeting in Geneva on "Postal vision 2005: Global challenges and strategies in the communications market", stressed the need for universal postal services:

Given the determination to avoid any obstacle to the development of the market by the imposition of high rates, the universal service has until now had an essentially social objective and consists sometimes of only a basic minimum service. However, even governments in favour of advanced liberalism may also want to ensure an ambitious universal social service. The spectacular development of the Internet, and with it that of job search sites, could in the coming years enrich the concept of the universal service.

1.5.4  The universal service in the European Union

As with liberalization, there is some degree of harmonization or convergence at the European level as regards the definition, scope and financing methods of the universal service.

The establishment of a European Single Market has led the European authorities to give growing attention to the universal service. The concept of universal service has been used increasingly since 1992, in preference to that of the public service by the Community institutions. The universal service was defined for the first time in the Green Paper on the post in 1992, as the basic service offered to everyone within the Community at affordable rates, and with a standard quality level. This definition was also used for the telecommunications sector. The texts referring to this concept all emphasize equality of access to the service irrespective of the social or geographical situation of the user.

In the European telecommunications services, the obligations to provide universal service in relation to voice telephony refer to the provision of a service by means of fixed connection which also permits the use of facsimile machines and a modems as well as a range of related services: the assistance of an operator, emergency services, information services, telephone directory, telephone booths.

The European Commission must establish a report at regular intervals on the quality, level and accessibility of the universal service of telecommunications in Europe and assess the needs to adapt the scope of the obligation to provide the universal service.

In the European postal services, despite a political agreement on what remains in the sphere of the monopoly, the methods of the universal service vary not only according to countries but according to time. The cost of the universal service depends on its content and selected quality, as well as geographical factors. However, in most cases the universal service is based on principles which are similar at the overall level: homogeneous and reasonable rates or a single rate throughout the territory for a type of letter, easy accessibility to post boxes, dense network of post offices, distribution of mail at home, increase in quality, etc.

The directive on common rules for the development of Community postal services and the improvement of quality of service provides a precise definition of the universal service and establishes the "right" to universal service, which consists of the supply of quality postal services provided on a permanent basis throughout the territory at affordable prices for all users.

Thus Member States must guarantee every working day and not less than five days a week (except in exceptional circumstances or geographical conditions) as a minimum:

In the case of both the postal and the telephone services, the universal service is thus a dynamic and progressive concept which must respond to changes in consumer needs and expectations.

1.5.5  The universal service throughout the world

Traditionally, the universal service is provided by the traditional operator holding the monopoly. But when certain postal or telecommunications markets have been opened up to competition, the enterprise holding the monopoly sometimes retains only the obligation to provide the universal service. The question of financing the service then arises. Basically two solutions are possible: the first consists of leaving the main operator to finance it as long as it remains dominant; the second consists of evaluating the extra cost generated by the constraints of the universal service and to finance them by the State or by all the participants in the sector according to a principle similar to that of charges levied for access to the telecommunications network (the interconnection surcharges).

The following examples illustrate differences in the conception, scope or financing of the universal service in the postal and telecommunications spheres.

In Japan, where the Post is made up of three "offices" (post, savings bank and life insurance) of the Ministry of Posts and Telecommunications, the postal service must be provided to all the population without discrimination and at rates as low as possible. There are approximately 24,600 post offices in Japan for 124 million inhabitants, with the average distance between each office being 1.1 km. Eighty per cent of these offices are of small size (less than three employees). Postal officers have concluded disaster-prevention agreements with local authorities and provide information on shelters and safety as well as the delivery of relief goods during a disaster. The Ministry recently announced that a reform plan would be introduced in 1997 to bring the postal service more into line with the rapidly ageing population. Letter carriers could be called upon to undertake welfare services for old persons, in addition to their ordinary work. Another idea is to provide a one-stop service in post offices dealing with address changes and any other documents relating to change of residence and required by the various public administrations.

In Australia, because of particular geographical constraints resulting from the size of the territory, the main problems concern the provision of service to distant regions. The Postal Act of 1994 reaffirms the Government's objectives in the postal sphere, i.e. to create a mail service to which all Australians have access at a uniform charge, with the service being provided by Australia Post. Special efforts have been made to establish post offices in rural areas. The universal telecommunications service is defined in the Telecommunications Act as the obligation to provide a standard telephone service and coin-operated telephone booths which are reasonably accessible to all Australians on an equitable basis irrespective of their place of residence or that of their occupational activity. The costs of the universal service are shared equally between all the operators holding a fixed or mobile telephone licence. The contribution of a given operator is calculated according to its share in the total duration of national or international connections of all the telecommunications service enterprises. The operator of the universal service, or the operators when the latter concerns a particular region, report each year to the regulator (Austel) the areas where the service has been provided at a loss. Austel calculates the cost of the universal service on the basis of the costs avoided by other operators or on that of the loss of revenue. The Ministry runs a universal service fund in which all operators participate and from which compensation is paid to the enterprises responsible for providing the universal service.

Finland offers an interesting example of the risks arising from the opening up to competition of the postal services as regards the maintenance of the universal service. Until recently, the possibility of compensating postal charges in rural areas through higher revenue from more profitable regions made it possible to guarantee a standard pricing system for the postal services throughout the Finnish territory. However, in 1995 one of the first competitors of the post requested a licence for the distribution of bulk mail in the capital and surrounding area, and other requests of the same kind were expected. Competitors operating only in the capital and surrounding region could "skim" the market without being required to serve the remote regions of the country. A working party was set up by the Government to examine the question of fair competition in such a situation.

In France, La Poste plays a major role in regional development and social cohesion policy. Out of the 17,000 offices or agencies making up the postal service in France, 12,000 are in rural areas. This illustrates their importance in small villages where La Poste often remains the last remaining public body. Rural post offices are not profitable: 3,000 postal agencies which make up 18 per cent of the offices account for only 0.05 per cent of the turnover of the enterprise. La Poste proposes service provision agreements to the mayors of 2,500 rural communes having a postal agency on their territory. These contracts, which are for a period of three years, stipulate that the municipality will appoint and remunerate, on a permanent or temporary basis, a communal employee to the postal agency. In exchange La Poste grants a monthly allowance to the commune, calculated in proportion to the office's activities. Furthermore, the financial services of La Poste provide a public service which is almost unique in Europe. La Poste does not refuse any client and provides banking facilities to the more modest categories of the population. Only Sweden has developed a similar concept of "universal financial counter service". France has adopted a broader concept of the public service than the universal service defined in the European text.

Under the Act of 26 July 1996, the public telecommunications service comprises three elements: the provision of the universal service, that of obligatory services, complementing the universal service, and tasks of public interest. The universal service consists mainly of the provision of voice telephony (and related services, such as the connection of facsimile machines and modems) at an affordable cost throughout the territory. The competitors of France Telecom will be required to participate in the financing of the universal service obligations, firstly by contributing to a universal service fund to be used to cover costs other than those of the levelling out of charges (public telephone booths, telephone directories), and secondly by an interconnection charge supplement to compensate the expenditure incurred by France Telecom in providing everyone with telephone sockets. This second contribution should terminate at the latest on 31 December 2000. The obligatory services (access to ISDN service digital network, rented lines, packet-switched data, voice telephony advanced services, telex) will be imposed only on operators responsible for the universal service.

The public interest functions refer in particular to the obligations related to defence and security, as well as public research and higher education. Since 1997, a debate has been launched on the enriching of the content of the universal service, in particular as regards education and telematic services (synthesis of the Minitel and the Internet).

In Sweden, the State contributes to financing the extra cost resulting from the presence of post offices in rural areas. A contract concluded between the Government and the Swedish Post establishes the responsibilities of Posten AB at the regional level and in the social sphere. An Act of 1994 requires the Swedish Government to ensure that a good letter and postal payment service is available throughout the national territory. As long as the Post remains the dominant operator, it has the obligation to provide a universal service defined in the law without any compensation. When competition becomes sharper, the financial cost of this universal service will be divided between all the operators. All the services of Posten AB have been maintained by means of government subsidies.

The universal service is seen in the United States today as a means of avoiding a division between those who have information and those who do not. Under national legislation the universal service consists in particular of the promotion of broad access to quality services at reasonable rates and to the guarantee that rural areas, or areas which are expensive to cover, enjoy access to telecommunications and information services at reasonable prices, in comparison with those applied in urban areas. Under the recent reform, access to advanced telecommunications services by schools, hospitals and libraries is also considered one of the principles of the advancement of the universal service in the future. Concerns about profitability explain the closing down of small post offices. The United States Postal Service has thus saved US$11,000 for each small post office closed in 1995 and 1996. Almost 400 small post offices were closed in 1996, with in each case at least one job being eliminated. Often, the retirement or transfer of a letter carrier results in the closing down of the office. Itinerant rural post offices have often been set up to offset these closures. Thus 57,654 itinerant distribution offices service 25.5 million letter-boxes in rural areas and 3,212 new itinerant offices have been set up within the rural distribution network.

In the telecommunications sector, federal programmes have been established, financed either by users or by operators. Thus the "Life Line Assistance" programmes subsidize users not able to pay the monthly surcharge payable to local operators while the "Link-up America" programme covers half the costs of installing a line and connection to a network. The federal element of the "Life Line Assistance" and "Link-up America" programmes is financed by indirect taxes on the interstate telephone service, with the participation of the states coming either from tax revenue or specific levies on telecommunications operators. Furthermore, long-distance operators contribute to a federal fund to compensate local operators holding lines costing more than 20 per cent of the average: this is the universal service fund, managed by the National Exchange Carrier Association, established to administer the new scheme governing access charges. Furthermore, the Telecommunications Act adopted in 1996 is based on an ambitious concept of the universal service.

In the United Kingdom, the universal service includes the distribution of letters and parcels addressed to any resident in the country, the maintenance of a national network of post offices and the provision of services at a standard charge. Attempts at privatization of the post have been opposed, amongst other factors, by the population's attachment to post offices, which provide a variety of everyday services.

In the telecommunications sector, the universal service is essentially defined as the possibility for everyone to have access to the basic telephone service, wherever they live. British Telecom does not receive any compensation for either the universal service which it alone provides or the levelling out of its structure of charges. The preference of OFTEL's preference for financing the universal service seems to be that of a universal service fund which could be financed by contributions from other operators or by transfers through interconnection agreements.

In Switzerland, the universal service comprises the telephone service as well as the transmission of data, emergency call services and public telephone booths. Under a new Bill, the traditional operator will be responsible for providing the universal service without compensation, for an interim period of five years. Subsequently, an invitation to tender could be issued.

In Germany, Deutsche Post has the obligation to provide a universal service throughout the country. Some quality standards are defined in the Ordinance respecting the protection of post office customers. No person in urban areas must have to go more than 2 km to find a post office. The new Postal Act defines the nature and scope of the universal service and stipulates that the new enterprises authorized to enter the various postal markets must meet various conditions to ensure provision of the basic postal services.

Although the universal service implies the provision of services throughout the whole territory of a given country, exceptions to this geographical levelling out are beginning to appear, including as regards the distribution of mail.

In New Zealand, for instance, inhabitants of rural areas must pay an annual subscription if they wish to receive their mail at home. In the same way, some distribution points in this country are not required to provide users with mail distribution six days a week, but only in some cases five or four days a week.

In India, a strategy for the development of access by rural populations to the telephone services was encouraged with the establishment of the Centre for the Development of Telematics. At the end of 1992, it had enabled 500,000 lines to be created in rural areas through the development of local technologies.

In Mexico, one of the conditions of the privatization of Teléfonos de México in 1990 was that basic telephone services should be rapidly and radically improved, and that a given number of telephone booths should be installed.

In Argentina, the Encotesa postal company retains the obligation to provide a universal basic service, but without an exclusive right; however it may receive a subsidy to cover the cost of this obligation in unprofitable areas.

In South Africa, the Government has recognized that access to the telecommunications services is an essential aspect of social and economic development, and is endeavouring to redress inequalities in access to telecommunications between the different parts of the territory. The mobile telephone operator Vodacom is contributing to this development plan in collaboration with entrepreneurs from underprivileged regions and neighbourhoods. Technical experience and know-how in the sphere of management developed in South Africa can be transferred to other countries of the continent. The South African Telecommunications Regulatory Authority (SATRA) recently ruled that call-back operations were illegal, arguing that call-back operators, who route calls from South Africa via cheaper operators in third countries, were jeopardizing programmes for improving the networks of developing countries.

In Togo almost 80 per cent of post offices are located in the interior of the country and run almost completely at a loss. A review of the location of offices is necessary if the Post wishes to make its operations profitable. Consideration is therefore being given to how to determine those areas where the Post should maintain its presence and where management should be entrusted to private operators.

The implementation of some degree of universal service does not necessarily imply a liberalization or strengthening of the national operator. Thus in Rwanda telephone services are available in newspaper kiosks which also sell drinks. The owners of these kiosks are entitled to a percentage of the income from the telephone (or facsimile) services. This example is interesting since it shows that the extension of access to telephone services does not necessarily imply a global and heavy reform of the supply of telecommunications services.

* * *

The need for a universal service in postal and telecommunications services was also discussed during the Second Session of the ILO Joint Committee for Postal and Telecommunications Services in 1991. In its conclusions, the meeting stressed that "notwithstanding the more commercial approach which has become prevalent in some countries, postal and telecommunications services throughout the world, whether public or private, remain subject to universal service and other prescribed standards."(6) The 28th World Congress of PTTI (now "Communications International"), held in Montreal in August 1997, adopted a resolution on the universal service in which it considered that certain services, including those provided by PTTI members, postal, telecommunications, electricity, and broadcasting bodies, are very important for the construction of a more just and equitable society and therefore should be provided as universal services. The congress stressed that the provision of universal services is a social necessity and obligation in the modern world which should not be denied on the grounds of profitability and that specific measures should be adopted to ensure universal service in a competitive environment because market forces do not suffice by themselves to satisfy all users.

The Tokyo Declaration of the Postal Summit of May 1997, which brought together the heads and senior executives of postal administrations from 11 countries (Australia, Canada, People's Republic of China, Germany, Italy, Japan, Republic of Korea, Singapore, Switzerland, United Kingdom and the United States) included the following statement: "On the threshold of the twenty-first century, we live in a social and economic environment which is rapidly changing as a result of progress in info-communications brought about by remarkable developments in technology. The world is becoming increasingly borderless as the pace of these changes accelerates with the approach of a fully realized multimedia age. We believe that, alongside such developments, there will be a continuing need in the new era for postal networks to provide fundamental communication services in a fair manner and at the lowest possible charges. The socially and economically vital mission of postal administrations is to continue to provide universal services to be shared by every citizen in every country throughout the world."(7)

Although the ways of financing the universal service in the context of liberalization may be legitimately disputed -- in particular by employers in newcomer enterprises, who may consider certain principles and arrangements as an excessive or undue burden -- it may be concluded that the universal service in the communications sector is a fundamental aspect of social cohesion. As such, most governments and many stakeholders are jointly committed to guaranteeing access to this service to the whole of the population and to adapt it to changing conditions and needs in the emerging information society.

1.  ILO: General report, Joint Committee for Postal and Telecommunications Services, Second Session (Geneva, 1991) p. 67.

2.  ILO: Technological change and workers' participation in posts and telecommunications, Report II, Joint Committee for Postal and Telecommunications Services, Second Session (Geneva, 1991), p. 6.

3.  Infopost: items such as advertisements, information leaflets, etc., delivered at bulk rates.

4.  ILO: op. cit., p. 3.

5.  UPU document 2005-11.4.

6.  ILO: Report, Joint Committee for Postal and Telecommunications Services, Second Session (Geneva, 1991), conclusions No. 9, p. 27.

7.  First Postal Summit, organized by the Ministry of Posts and Telecommunications of Japan (Tokyo, 12-13 May 1997), declaration attached to UPU document 2005-IV-8.28.

2.  The profile of employment in the context
of structural and regulatory adjustment

2.1  Introduction

The structural and regulatory changes described in Chapter 1 have generally resulted in job losses amongst many traditional operators of the postal and above all telecommunications services, at least (but not exclusively) in the OECD countries in which markets are considered as mature, with a generally satisfied demand for basic services and competitive offers of new services. Job creation in the industrialized countries is at present mainly due to the emergence of private new enterprises. On the other hand, in low or intermediate income countries or those in transition, the supply of basic services has not yet reached saturation point and is even sometimes far from doing so. The creation of jobs is hindered less by demand in general than by solvent demand, and the growth in the supply of communication services is often impeded by local shortage of capital. Thus the liberalization and globalization of the communication services highlighted in the previous chapter do not lead in the short or medium term to a harmonization of the worldwide supply of services or to a global increase in the level of employment in this sector. While private investors play an essential role in the diffusion of communication services at the global level, particularly as regards new services linked to the new technologies, their action must be supported and complemented by competent international organizations in the economic and social spheres, as well as by the public authorities in general.

* * *

Liberalization, technological progress and the globalization of communications are long, complex and interrelated processes. It is therefore particularly difficult to measure the precise impact of structural and regulatory changes on the level and structure of employment.

Firstly, with the exception of a few countries which liberalized their telecommunications services some 15 years ago, not enough time has yet passed to be able to analyse such an impact. This is particularly the case in the postal services where deregulation has come later and has been less radical. Secondly, the statistical tools for measuring these repercussions are lacking, even if it is possible to make a few estimates based on surveys or questionnaires. Thirdly, it is extremely difficult to isolate, as regards the level and structure of employment, what is really and directly due to structural and regulatory changes. Many of the changes noted would undoubtedly occur even in the absence of the liberalization of the postal and telecommunications services, given the rapidity of the technological changes under way at the same time and the consequences of which on employment and conditions of work are considerable, as highlighted by the report produced by the Office in 1991.

However, recent tendencies, particularly since the last meeting of the Joint Committee for Postal and Telecommunications Services, are clearly and often closely linked to the restructuring and opening up to global competition of sectors which were still very protected a few years ago.

While privatization and liberalization are often likely to increase the effectiveness of telecommunications operators (and even of certain postal services), these processes have had major consequences in many countries on the profile of employment.

The retraining of employees whose workplaces have been abolished is seen as one of the key elements of the liberalization, privatization and restructuring programmes. Another central aspect is the desire of employers to establish greater flexibility in the management of staff (privatization of management techniques, greater use of part-time work and fixed-term contracts, redeployment in subsidiaries, decentralization of labour relations).

Unlike the telecommunications enterprises, in which the introduction of new technologies has been followed by sometimes radical changes in the organization of work, the postal services which remain major users of manpower have experienced slower changes, even if productivity gains resulting from the new technologies have often been substantial. This circumstance explains why telecommunications are given greater space below than postal services.

2.2  Employment among traditional operators

In a world of increasing trade in goods and services, the quality of the postal and telecommunications networks is a major factor in the competitiveness of national economies. Employees in the communications sector are, along with computer scientists and workers in other branches of the information economy, the driving force of the expansion of the service sector and the globalization of the economy. By restructuring the operators concerned, opening up their capital (or even privatizing it completely) and subjecting them to competition, the public authorities are endeavouring -- over and above immediate budgetary objectives -- to create in the long term more jobs in the rest of the economy than those suppressed among the traditional operators of the postal and telecommunications sectors. It is still too soon to say with any certainty whether this is a solid medium/long-term trend, even if this seems to be the case in the States which have pioneered the liberalization of telecommunications (United States and the United Kingdom).

2.2.1  The traditional telecommunications operators

According to the 1995 World Telecommunication Development Report, employment in the public telecommunications services sector has fallen by 6 per cent since 1982, with significant reductions in the Asia Pacific region (-25 per cent) and in North America (-23 per cent). This decline has been mainly in traditional services such as the construction of infrastructure, the installation of lines or maintenance. The employment of women has been particularly affected since many were previously employed as operators or administrative assistants.

However, there has been some increase in the level of employment in the spheres linked to new equipment and in particular, in the management of networks and customer services-skills which were not traditionally recognized as essential in the communication services.

In the OECD area the global reduction of employment among the main traditional telecommunications operators, is likely to continue because of the productivity efforts being made by these enterprises in the face of increasingly sharp competition in costs and quality (see table). According to a labour relations official at British Telecom, the enterprise fulfils the same obligations towards the public as before privatization, providing a better quality of service with just over half its previous workforce (133,000 persons instead of 240,000). This negative evolution mainly concerns jobs related to the traditional activities of the telecommunications services placed under a monopoly, whereas the net balance of employment is positive in sectors opened up to competition. Between 1985 and 1995, British Telecom lost 45,800 technical management and network maintenance jobs (-42 per cent) and 29,100 telephone or assistance operator jobs. The recentring of activities in the firm led to the loss of 19,000 jobs in 1985 alone (as a result of the outsourcing of catering, maintenance, cleaning, fleet of vehicles, etc.).

In the United States, following the dismantling of AT&T in 1984, employment fell by one-third in five years, particularly in the division of communications services responsible for long-distance and international services which were opened up to competition. With the reorganization of the group in 1996, the objective was to suppress 13 per cent of jobs (out of 300,000 employees) over three years, which led to a debate on down-sizing which went beyond the framework of this enterprise and which was fuelled by the publication of the salaries of managers in the group. The number of lay-offs was subsequently reduced from 30,000 to 8,000, and the objective is now seen in terms of the "adjustment" or "redeployment" of employment rather than making the enterprise "leaner". After AT&T decided to refocus its activities on telecommunications services, it is traditional activities such as wire telephones, administration as well as equipment manufacture which have experienced the largest reduction in staff.

Table. Changes in employment levels in telecommunications enterprises
in selected OECD countries
 

Country

Companies

Employment levels

Changes in employment levels

Per cent change in employment

Australia

Telstra

94 000

- 1986

68 000

- July 1996

- 28% (26 000 employees)

-- announced July 1996

68 000

- 1991

59 000

- Dec. 1996

- 13% (9 000 employees)

-- 1997-99 plan

59 000

- Jan. 1997

37 000

- Dec. 1999

- 37% (22 000 employees)

Optus

2 600

- 1994

Increase (2 600 employees)

-- planned

2 600

- 1994

5 000

- 2000

+ 92% (2 400 employees)

Canada

Bell Canada

54 632

- 1991

50 982

- 1993

- 7% (3 650 employees)

-- planned

50 982

- 1993

40 982

- Mar. 1998

- 20% (10 000 employees)

BT Tel

15 015

- 1991

13 478

- 1993

- 10% (1 537 employees)

AGT

9 439

- 1991

6 946

- 1993

- 26% (2 493 employees)

MTS

5 549

- 1991

4 408

- 1993

- 21% (1 141 employees)

Sask Tel

4 289

- 1991

3 517

- 1993

- 18% (772 employees)

NB Tel

2 432

- 1991

2 283

- 1993

- 6% (149 employees)

France

France Telecom

-- early retirement package

151 000

- 1996

126 000

- 1998

- 17% (25 000 employees)

Germany

Deutsche Telekom

-- planned by 2000

225 435

- 1994

165 435

- 2000

- 27% (60 000 employees)

Italy

Telecom Italia

73 217

- 1980 (SIP)

87 970

- 1993 (SIP)

+20% (14 753 employees)

(formerly SIP)

101 338

- 1993 (TI)

95 713

- 1994 (TI)

- 6% (5 625 employees)

Japan

NTT

300 000

- 1985

216 000

- 1993

- 28% (84 000 employees)

Norway

Telenor

-- 1995 reductions

15 200

- Dec. 1994

13 718

- Dec. 1995

- 10% (1 482 employees)

-- 1996-98 planned reductions

13 718

- Dec. 1995

11 298

- Dec. 1998

- 18% (2 420 employees)

UK

British Telecom

251 700

- 1982

137 500

- Dec. 1995

- 45% (114 200 employees)

-- planned by 2000

137 000

- Dec. 1995

100 000

- 2000

- 27% (37 000 employees)

Mercury Communications --

1 500

- 1987

10 500

- 1994

+ 600% (9 000 employees)

telephone unit of Cable & Wireless Communications

10 500

- 1994

Significant staff reductions
after 1994

US

Overall

965 000

- 1983

872 000

- 1992

- 10% (93 000 employees)

AT&T -- unionized employees

250 000

- 1984

100 000

- 1992

- 60% (150 000 employees)

- 1996

- 1996

Reduction (16 000 employees)

AT&T -- managerial

- 1996

- 1996

Reduction (24 000 employees)

MCI and Sprint

Increase (40 000 employees)

Regional Bells

-- regulated core businesses

565 289

- 1984

407 008

- 1992

- 28% (158 281 employees)

-- non-regulated businesses

28 667

- 1984

114 667

- 1992

+ 300% (86 000 employees)

-- planned after deregulation of local phone and cable services

- planned

- planned

- 20% planned (100 000 employees)

Source: Anil Verma: "The impact of deregulation, privatization and restructuring on employment and employment relations in telecommunications services", report prepared for the ILO, 1997.

During the first phase of liberalization, the regional telephone companies (Baby Bells) also experienced a significant drop in staff (-158,281 jobs between 1984 and 1992). In other countries as well the level of employment first rose regularly in the 1980s among the main operators, and then fell after the liberalization. Thus in 1995 Bell Canada lost 3,170 jobs (out of approximately 50,000) following the greater competition decided upon by the Government. This reduction in the level of employment is likely to continue in the coming years, since the company has announced its intention to reduce further its workforce by combining early retirement plans, redeployment, training measures and severance bonuses.

Similarly, in Australia employment fell within the Telstra public operator between 1986 and 1996 as a result of liberalization and the maturing of infrastructure (down from 94,000 to 67,000). This reduction occurred despite the merger during this period with the telecommunications operator Overseas Telecom Corporation (OTC). In 1996, Telstra announced the suppression of 9,000 jobs over one year, i.e. 12 per cent of its workforce, and 22,000 jobs over three years.

Employment within the Hungarian telecommunications operator HTC fell by 5,500 employees between 1992 and 1997 (out of a total workforce of 16,500 persons in 1997), mainly due to the structural decentralization of the operator, which resulted in a series of subsidiaries.

Since the beginning of the 1990s, employment in the major operators in Europe has shown a significant decline (in the order of 2.6 per cent per year). The reduction has been the most marked in the European countries in which liberalization has either been the most precocious (United Kingdom) or the most vigorous (Scandinavian countries). Thus almost 80 per cent of the jobs lost in recent years by the major European operators occurred in the United Kingdom, Sweden and Finland, i.e. where the deregulation movement was the most marked.

For example, employment in the Swedish public operator Telia dropped in recent years by about 15,000 persons (approximately 30 per cent of total staff). The Swedish SEKO union reported that the reasons for this heavy reduction of the workforce can be attributed in part to the slower economic growth in the country, and to the loss of market share and stronger competition, which have all had a negative effect on turnover. Reductions have mainly affected personnel carrying out installation work and services and telephonists. According to the union, jobs in the special personnel development department and those with responsibility for developing the skills of these workers will cease to exist in 1999. Some 2,000 workers with very widely differing skills will probably be in a very difficult situation if the company does not succeed in redeploying them to new jobs, either within or outside Telia.

In Greece, the traditional telecommunications operator OTE estimated at approximately 8,000 the number of surplus posts out of a total of 26,140 jobs in 1994. The number of desired departures within the framework of a retirement plan has been fixed at 1,500 a year.

In recent years Luxembourg has made a vigorous effort to bring its telecommunications network up to the level of that of other countries of the European Union, which explains the virtual stagnation of employment in this sector.

According to a report on the telecommunications sector commissioned from BIPE Conseil by the European Commission, the traditional telecommunications operators in the EU have reduced their workforce regularly since the beginning of the 1990s for three main reasons:

In the case of the most likely scenario envisaged in this study, foreseeable job reductions in Europe among traditional operators should be around 275,000 in the year 2005.

According to the same report, job creation among the new operators and service providers, both upstream and downstream in the branch, will not easily compensate the major reductions expected among major operators. The rapid liberalization and accelerated diffusion of technology scenario in all the European countries is making a positive contribution to the volume of employment in the branch (+93,000 in 2005). But in the event that liberalization is not introduced at the same pace in all the countries, which the BIPE Conseil study considers the most likely scenario, the report estimates that regulatory developments will have a negative impact on employment in the telecom sector (-44,500 jobs in 2005).

2.2.2  Employment in public postal operators

The postal sector continues to be a major employer in many countries. Employment in the postal services in 1995 totalled some 6 million people worldwide, with the industrialized countries accounting for some 2.5 million postal employees. In some industrialized countries such as the United States or the United Kingdom, employment in the postal services slightly increased in the period 1990-95, while in most other developed countries the number of postal employees remained stable or decreased.

In the European Union where postal services employ some 1.4 million people, recent research undertaken by Price Waterhouse for the European Commission shows that employment in the 15 European Public Postal Operators (PPOs) declined by some 7 per cent between 1990 and 1995 or by a total of almost 112,300 employees. The major decreases occurred in Denmark, Finland, Germany, Italy and Sweden. According to the same research, the majority of EU postal sector employees (73.6 per cent) were engaged in the provision of mail services, with the remainder being employed in financial and retail services; this latter proportion even grew in the period under consideration.

Employment in most PPOs of the European Union is expected to decrease up to the year 2000; those PPOs that experienced the most marked employment reductions between 1990 and 1995 are expecting further substantial reductions in the years to come. Most redundancies have occurred in postal deliveries, counter services, letter and parcel sorting and transportation sectors. None of the PPOs expects to increase the number of persons employed in financial/retail services up to the year 2000. The franchising and subcontracting of post offices will continue to be one of the main causes of the decreasing level of employment. However, reductions in employment do not necessarily constitute job losses in absolute terms and frequently involve the transfer of employment to the private sector.

Among the factors which have influenced these developments are the separation of post and telecommunications into different and independent entities, the move towards progressively deregulating the postal market, the increase in competition in delivery and communications markets and the introduction of new technologies, such as the mechanization of sorting centres.

Thus at Post Denmark, where the total workforce was reduced by almost 15 per cent between 1990 and 1995, investment in new technology is expected to result in massive retrenchment around the year 2000 probably affecting as much as 25 per cent of the total number of jobs.

Between 1990 and 1995, La Poste in France lost 21,000 employees while over the same period 5,000 contract jobs were created, with part-time workers (whether voluntary or not) becoming increasingly numerous. The management is planning to suppress 28,000 permanent posts between 1997 and 2001. According to the Force Ouvrière trade union, if the postal sector becomes markedly liberalized, the suppressions over the same period could be around 60,000.

Furthermore, La Poste has undertaken a reorganization of financial services which, in the next five years, could result in the suppression of 12,000 jobs (out of 310,500 in 1996). However, during the summer of 1997, the French Government announced the creation of 5,000 jobs to develop new services and increase the number of employees in contact with the public.

According to the German postal workers trade union (DPG), the consequences of liberalization on employment and conditions of work should be seen as generally negative. According to this trade union, during phase one of the postal reform, which began in 1989, the postal services lost approximately 70,000 jobs. More recently, in 1996, a further 22,000 jobs were suppressed, with the workforce now totalling 285,000. The DPG believes that other staff reductions could follow if the objectives set in the new legislation are actually achieved.

In Hungary, since the beginning of the 1990s, following a separation between the post and telecommunications and the transformation of the postal services into a state capital enterprise, the compression of staff affected 6,288 persons in the Post, mainly in the distribution of letters and newspapers, counter activities and maintenance of the automobile fleet.

In the Canadian postal service the recent decision to transfer part of addressed publicity mail to the private sector has resulted in redundancy for 10,000 employees. This again is a direct consequence of the effects of liberalization on employment.

According to the New Zealand Engineering, Printing and Manufacturing Union, total staff fell from 12,000 to 8,000 between 1987 and 1996. The legislation to be enacted in 1998 is expected to speed up the cost-cutting measures of the New Zealand postal services, which may result in an increasing number of part-time workers, especially in delivery.

Information received from the Swedish Union SEKO indicated that the staff of the Swedish Post has been reduced from 57,000 workers in 1990 to about 44,000 in 1997. However, an increase has occurred in recent years in sales and computer development jobs (between 1,000 and 1,500).

While the public postal operators in most industrialized countries have experienced substantial reductions in employment, in other countries employment levels in the postal services have remained stable in recent years and do not seem to have been dramatically affected by the changes under way. Some countries have even seen a small growth in employment. In Japan for instance, in the public postal services, the number of employees remained mostly unchanged and even slightly increased between 1984 and 1995 (from 141,048 to 142,538). However, in August 1997, the Ministry of Posts announced that it would reduce the outside workforce engaged in the postal savings and insurance branches by 7,000 over the next decade. This would be the first cut in the postal saving account workforce in 44 years.

In the United Kingdom, employment in the public postal sector increased slightly between 1991 and 1995 (see figure 8). Meanwhile, overall employment among private postal operators increased by 17 per cent between 1994 and 1995 (from 39,000 to 45,000 employees).

According to a recent study carried out for the ILO on selected multinational enterprises in the United States courier service industry, the incursions made by the large courier companies such as the United Parcel Service (UPS) and FedEx into parcel and document delivery service markets where they are permitted to compete with the United States Postal Service have been substantial. While employment in the latter has steadily grown since 1975, there is no doubt that growth would have been greater in the absence of competition in these product areas.

In the United States Postal Service employment remained stable between 1987 and 1996 as regards full-time permanent workers (approximately 760,000). On the other hand the number of part-time or non-permanent workers almost doubled (from 75,435 to 134,696) during the same period.

A Bill to partially liberalize the postal sector is currently being discussed by Congress. Private enterprises could have the right to distribute letters below a US$2 charge while the United States Postal Service could be authorized to propose discounts for bulk mail and to offer new commercial services. According to the National Association of Letter Carriers, if this reform is adopted, its impact on employment should be slight, at least in the short term. On the one hand, the reduction of the scope of the monopoly could threaten some jobs, in particular in sorting and distribution. On the other hand, the provision of new services by the United States Postal Service could result in the creation of new jobs in sales, financial services or the distribution of parcels.

The parcel distribution service of the USPS experienced an unexpected increase in the summer of 1997, following the strike at the United Parcel Service (UPS), the country's leader in express parcel delivery. Employment was the principal grievance during this strike in so far as three-fifths of UPS employees are part-time workers, with an hourly wage of US$9-15, sometimes less than half that of full-time employees (US$20). At UPS, which can be considered as an traditional operator in the parcel service, 80 per cent of employees recruited between 1995 and 1997 were on a part-time basis, as a result of the flexibility in management required by employers in this kind of activity. The agreement signed with the Teamsters union after the 15-day strike makes provision for the creation of 10,000 full-time jobs through the regrouping of part-time posts, in addition to 10,000 job offers.

In the postal sector of most developing countries, employment remained stable between 1991 and 1995 and in some cases showed a slight or even marked increase. Thus the country with the world's largest workforce in the postal services, China, employed some 1.1 million persons in the sector in 1991; this figure increased by almost 10 per cent in 1995 (to 1.2 million employees).

In South Africa, employment in the postal services even increased by almost 20 per cent (from 25,766 to 29,782 employees between 1994 and 1995) and in Brazil, the increase was even higher (almost 25 per cent) between 1993 and 1995. Although the increase in other countries (India, Indonesia, Sri Lanka, Malaysia, Egypt, Morocco, Tunisia) was not so significant, it nevertheless reached in some cases levels of 8-10 per cent of total employment in postal services in the period under consideration.

In several Latin American and Caribbean countries (Barbados, Colombia, Jamaica, Mexico, Panama, Trinidad and Tobago, Uruguay) employment remained stable in the postal services between 1991 and 1995, although it declined in other countries in the region, (Costa Rica, Guatemala, Peru, El Salvador and Venezuela). In the case of Peru, the drop was almost 50 per cent, while in Argentina, following the introduction of a scheme of voluntary departures, the permanent workforce fell to 20,000 at the end of 1996.

Employment in the postal services has fallen significantly over the last five years in countries such as the Russian Federation (by almost 20 per cent) and the Republic of Moldova, Romania (by some 10 per cent), although it has remained stable in Latvia, Slovakia, Lithuania and increased in Ukraine, Poland, Estonia and Croatia (see figure 8).

In the postal services sphere, and despite the constraint of reducing the public deficit, the developing countries -- or countries whose equipment is considered insufficient to meet their needs -- should extend their networks to provide postal infrastructures which will further their overall economic development. At the very least, these countries should not experience any rapid reduction in employment in the postal sector, even if automation and new technologies will once again reduce the use made of poorly skilled labour. The situation should be different in some countries in transition towards a market economy because of the previous existence of surplus staff and persistent budgetary hardships.

2.2.3  The management of staff reductions
in the restructuring process

Within the traditional operators, the reduction of employment often involves the combination of several methods: early retirements, assisted voluntary departures, recruitment freezes, retraining, replacement of full-time jobs by part-time jobs. In some countries, employment reductions in the postal and telecommunications sectors have been managed without resorting extensively to compulsory redundancies. Early retirement and voluntary redundancy schemes have been used instead along other measures, such as functional and regional deployment, natural wastage, cuts in working time and new forms of work organization.

Thus the management of the continued decline of employment over the past 12 years in British Telecom has combined several methods of social accompanying measures to avoid dismissals: redemption of retirement contributions, early retirement from the age of 50, placement in other enterprises with training assistance. In the Netherlands, where the Post has reduced its staff by between 15 and 20 per cent as a result of liberalization since the beginning of the 1990s, these reductions were achieved without dismissals.

In the same way, NTT, the Japanese traditional operator, has gradually but substantially reduced the number of its employees. Since the beginning of the 1990s, employment has been adjusted without dismissals, essentially by the transfer of jobs towards subsidiaries. Sixteen thousand seven hundred jobs were thus transferred in 1992. A distinction has been made between employees working in a structure other than NTT, who retain the status of employees of this operator, and those who, although working in a subsidiary, no longer have an employment relationship with NTT but could be re-employed by the latter in the future. NTT has provided an early retirement plan for employees above the age of 45 and who have more than ten years' seniority. A voluntary retirement plan was also set up with a view to reducing the 10,000 employees aged between 40 and 57. The workforce thus fell from 300,000 in 1985 to 216,000 in 1993 and 197,000 in 1996. Further job suppressions will be made over a period of five years and be based on various measures: limitation on recruitment, early retirement, redeployment of staff in subsidiaries of emerging sectors such as multimedia.

In Norway, the reduction of employment began at the beginning of the 1990s in Telenor, the main Norwegian operator, where recruitment has been halted. In 1993, 2,500 administrative employees, technicians, operators, or consumer service employees were assigned to a resource pool for subsequent retraining. Early retirement plans were used between 1993 and 1995 and the staff reduction process is not yet over: the workforce fell from 21,500 employees in 1983, to 13,700 in 1995 and is expected to be 11,330 at the end of 1998.

Among the methods for managing staff reduction, an important role is accorded to early retirement, which has been used by British Telecom, NTT, Bell Canada and Telenor, amongst others, despite its cost, within the framework of restructuring plans, since it allows lay-offs to be avoided and the average age of the workforce to be lowered. Furthermore, given the weight of seniority in the calculation of remuneration, younger staff are less expensive for enterprises.

In Sweden, staff reductions have been facilitated at Telia by the small number of workers protected by a permanent employee status. Between 1990 and 1994, 2,500 employees were granted early retirement (compared to 2,100 lay-offs, 2,900 assisted voluntary departures, and 7,500 departures combined with new employment, thanks to training or assistance provided by Telia).

In Deutsche Telekom, the staff reduction process also involves the use of early retirement of both permanent and contractual staff, from the age of 55 for non-managerial staff and 60 in the case of managers, as well as the granting of voluntary departure allowances for employees who want to leave the enterprise before this age. Early retirement affected more than 5,000 employees in 1995, with the number expected to fall by half in the following years. According to Deutsche Telekom, the workforce should stabilize around 170,000 by the year 2000 (compared with 201,000 at the end of 1996).

In France Telecom, the average age of the workforce is increasing (it is currently 42 years). An agreement was signed in 1996 with two trade unions (Force Ouvrière and CGC) on the "end of career" status of staff aged at least 55. Twenty-five thousand employees could be interested by this arrangement, which could in turn result in the creation of at least as many jobs for young persons over the next ten years, including approximately 4,800 permanent employees up to 2002.

The semi-public Belgian operator, Belgacom, has offered early retirement to its 25,000 employees over the age of 50 with more than 20 years' seniority. The guaranteed replacement income is equal to 75 per cent of the work salary (plus a bonus equal to an annual half salary). Participating employees must leave at 60, instead of the normal age of 65. The effect of these measures, which are voluntary and will extend up to the beginning of 1999, is still uncertain.

Age-related measures are also used by some public postal operators. Thus the Portuguese postal service introduced an early retirement plan at the beginning of the 1990s but would like to discontinue it because of the cost of the measures. In another example, between 1990 and 1995, 2,600 workers in the Swedish Post took up early retirement.

* * *

In the final analysis the strategy for reducing the workforce in the context of the liberalization of markets and globalization depends on a fairly large number of objective and subjective factors: the pace and scope of the reductions being sought by employers, the strength of the trade unions and methods of social consensus, the nature of the operators (post or telecommunications, public, private or partial control by government), financial situation, degree of opening up to competition, ability to transfer employees to other bodies or subsidiaries, population pyramid in the respective operators, amount of funds provided by governments for social measures to accompany staff reductions, aptitude for change, training, occupational and geographical mobility of employees and the interest of the latter in schemes to encourage departures.

This last-mentioned aspect may be a decisive factor for an operator, who may then choose for example between retraining, an early retirement plan, redeployment or dismissal, or a combination of several elements. Thus the next set of staff reduction measures in AT&T will include several thousand lay-offs since many employees are not interested in the various arrangements proposed, often because they cannot leave their jobs in the firm because of financial and family reasons.

2.3  The sources of job creation

The new sources of employment in the postal and above all telecommunications services seem to be concentrated in three spheres:

2.3.1  The creation of employment in
the economy as a whole

It is likely that the new services linked to the new technologies will result in the creation of new jobs in many sectors of the economy, despite the strong productivity gains resulting from these technologies.

According to the BIPE Conseil report, the expected drop in charges following the opening up to competition should help improve the purchasing power of enterprises and households, thus fuelling consumption of other products and services outside the telecommunications branch. Furthermore, the growth in activity by operators and new service providers will result in an increase in the purchase of equipment and intermediary consumption by these enterprises, giving a stimulus to the sectors of activity supplying the telecommunications branch and sectors which are linked by the effect of the multimedia convergence. According to the most likely scenario proposed by the BIPE Conseil report, the liberalization of telecommunications services should result in a more rapid diffusion of telecommunications services and reductions in charges which will have positive indirect effects on the European economy as a whole, largely compensating for the negative effects on employment of productivity gains made possible by the diffusion of telecommunications, as well as the negative effects on employment among public operators resulting from liberalization. In the most likely scenario described by this study, there would be a net creation or protection of 906,000 jobs at the European level, in the economy as a whole, by 2005.

A scenario of the same kind should result, mutatis mutandis, in the OECD area as a whole, and gradually extend to the rest of the world. An optimistic vision of things could even suggest that the progress of the information society and globalization will in the end have an overall multiplying effect on employment.

The postal sector also generates indirect employment. According to the already mentioned Price Waterhouse study prepared for the European Commission, suppliers to the postal operators in the European Union have seen growth, which they expect to continue, in the production and use of postal equipment on a worldwide scale; postal operators are outsourcing their transportation to airlines, railways and other means; postal operators increasingly use outsourcing and franchising of post office functions; and in recent years there has been an upsurge in the number of mail preparing, mail order and direct mail companies.

2.3.2  Employment trends among traditional operators
using incomplete national infrastructure

While employment has fallen and continues to fall among the main traditional operators in mature markets (above all in the telecommunications sector), the situation is clearly not the same in the case of operators (whether privatized or not) in countries which continue to construct and/or modernize their network.

Thus in the Republic of Korea, the partial privatization of telecommunications and the termination of the public employee status at the end of the 1980s have not resulted in a reduction of staff; indeed, the contrary has happened since the market has undergone considerable expansion. Thus during the years following privatization, the number of employees in Korea Telecom increased by 32.4 per cent (see figures 1 and 2).

In Mexico, two years before the privatization of the traditional telecommunications operator Telmex, in 1990, only 17 per cent of households were equipped with telephones and the waiting list included a million and a half applicants. Overall, privatization has not in itself resulted in a reduction of staff and following an agreement with the trade unions there have been no lay-offs. The maintenance of the level of employment (+0.8 per cent between 1984 and 1994) is to be explained by the fact that voice telephony was far from being fully developed in the country.

In Chile, during the period of privatization and liberalization of telecommunications, employment rose by 10 per cent between 1984 and 1994 following the installation of equipment and the attraction of this country for international investors and the overall growth of its economy (see figures 3 and 4).

Between 1984 and 1995, most telephone operators in the member States of the Southern African Development Community experienced an increase in their workforce, with the exception of South Africa and Zimbabwe (see figures 5 and 6). In Ghana Telecom, the administrative and technical services experienced an increase in the workforce in the 1990s, in particular through the recruitment of highly qualified specialists.

However, although these examples suggest that employment in the sector is being increased or maintained, it cannot be concluded that this is a systematic pattern throughout the large number of countries whose national infrastructure remains incomplete (see figure 7).

2.3.3  Job creation in the new services
and new entrants

The 1991 ILO report on technological change and workers' participation prepared for the Second Session of the Joint Committee for Postal and Telecommunications Services pointed out that "so far as the general trend of employment is concerned, it is foreseeable that, in the case of telecommunications, after a relative stabilization due to higher productivity, the workforce growth will resume as numerous services are developed in the new entities (subsidiaries, privatized undertakings)".(1) The anticipated growth in the workforce resulting from the development of new services seems to be confirmed in the countries in respect of which relevant data are available.

A recent survey by the Boston Consulting Group shows that in the United States employment in the last ten years dropped by 98,000 employees in local telecommunications placed under the monopoly of regional companies, whereas an increase of 115,000 was experienced in activities subject to competition (50,000 for cellular telephones, 37,000 for cable and 28,000 for long-distance telecommunications).

Figure 1. Telecommunications employment in Asia (total number of staff)

Figure 2. Compound annual growth rate of employment in Asia, 1984-94 (%)

According to the BIPE Conseil study carried out for the European Commission, a significant number of jobs should be created by the new network operators resulting from the gradual opening up of markets to competition, as well as by providers of telecommunications services. The new operations and service providers in the European Union could, in the best of cases, result in the creation of 162,000 new jobs by 2005; although in the most likely scenario, the figure will probably be around 114,000. As regards the telecommunications sector, these job creations will not probably be able to compensate in themselves job losses in the traditional operators.

The OECD report cited earlier emphasizes that the explosion of the telecommunications market results in the creation in a number of new jobs for two reasons:

These subjects were also discussed during the ILO Symposium on Multimedia Convergence in January 1997. According to one of the panellists employment in the multimedia industries continues to grow considerably faster than in the economy as a whole. Employment in those industrial sectors closely linked to multimedia has increased by 15 per cent over the last two and a half years, compared with employment growth of around 6 per cent in the economy as a whole.

The new jobs created are appearing above all in sectors adjacent to communications, in various activities linked with multimedia convergence and the information society. The postal services, as a result of the use of new technologies and their frequent offer of financial products or saving services, should be affected more or less directly by this tendency.

Figure 3. Telecommunications employment in Latin America
(total number of staff)

While the traditional telecommunications operators in the industrial countries are in overall terms losing jobs and refocusing their activities on commercial and value added services, the outsourcing or transfer of many of their activities to a subsidiary may result in the creation of new and dynamic enterprises and individual job-creating initiatives. Furthermore, as a result of the internationalization of their activities, they are establishing offices abroad or joint subsidiaries which also create jobs.

However, most of the new jobs should result from the arrival of new entrants, whether they establish their own networks or use those of existing or alternative infrastructures, or offer new services with labour specially recruited at market cost and often on a temporary basis (see figure 9 on the new operators in the European Union).

Internet service providers (which are merging at a rapid pace) and, more generally, the providers of on-line information services, are developing as a result of the rapid growth of computerization in homes and among small and medium enterprises. Furthermore, many enterprises which repackage information which is provided through servers are being increasingly used, as well as content editors or intermediation companies which put together virtual commercial centres.

Figure 4. Compound annual growth rate of employment in Latin America, 1984-94 (%)

There is also strong competition in the help desk market, which offers new outlets for computer scientists or freshly trained or retrained technicians. The computer enterprise Apple has thus subcontracted its entire help desk system in Europe to British Telecom. It is estimated that in France, for example, the help desk market will increase by 30 per cent between now and 2001 for professional workers and 60 per cent for the general public market.

At AT&T the growth of new services has recently allowed 6,000 new jobs to be created, in particular in such sectors as consumer services, cellular telephones and access to the Internet.

In Australia, unlike the situation in the Telstra public operator, the new entrant Optus is expected to double its workforce between 1994 and 2000.

According to the Swedish SEKO trade union, new operators on the Swedish market have experienced growth, with Telenordia now employing about 200 workers, Global One 300 workers, Tele2 350 and Europoltian about 250. Some of the workforce of these new operators was previously employed by the Telia AB group of companies.

However, some enterprises operating in new markets create only a limited number of jobs, due to the technical centralization process involved in the computerization of phone calls. Thus, International Telecoms, the United States call-back company which provides cheap cross-border communications, has a staff of only 200 -- a vivid illustration of the way electronics allow global reach almost without physical presence.

In the postal sector there is a multitude of small companies, most of which employ only one or two persons but which draw on a large number of "self-employed" associates. Entry into the sector is also relatively easy, new companies frequently emerging and others closing down. Various sources (DHL, Price Waterhouse, European Commission) estimate at between 350,000-400,000 the number of employees in the private postal sector in the European Union.

Figure 5. Telecommunications employment in southern Africa
(total number of staff)

Figure 6. Compound annual growth rate of employment in southern Africa, 1984-94 (%)

Figure 7. Total number of staff in telecommunications services and their evolution (1991-95)

Figure 8. Total number of staff in postal services and their evolution (1991-95)

Figure 9. Employment in new telecommunications operators in the European Union (1995)

In Sweden, following the liberalization of the postal sector at the beginning of the 1990s, around 1,000 new jobs were created by new enterprises. At the beginning of 1997, there was an increase in the establishment of new postal enterprises, although the trend had lost some of its impetus by the end of the year. Some of these new firms receive enterprise creation subsidies, which makes it difficult to assess their medium-term development.

Beyond the multiplication of small private enterprises or specialized subsidiaries of the national postal services, reference must also be made to the development of global integrators, which are continuing to increase their market shares. Benefiting from the progressive reduction of the postal monopolies, international transport and parcel companies are increasing the size of their workforce.

According to the European Express Organization (EEO), which represents 14 express and courier service companies that operate in Europe, employment among its members increased by 230 per cent between 1989 and 1995, up from 18,000 to 60,000 in just six years. While some of this growth was due to an increase in the relative market share of the companies concerned, the EEO estimates that about 70 per cent is due to organic growth, with the remaining 30 per cent accounted for by mergers and acquisitions. Price Waterhouse has collected detailed data on the number of persons working in parcels and document express services in the five global integrators operating in the European Union (DHL, FedEx, GD Express, TNT and UPS), which show that the global integrators experienced a significant increase (46 per cent) in total employment (from 35,500 in 1990 to 52,000 in 1995). The global integrators estimate that if growth due to acquisitions is excluded, their net employment rose by approximately 23 per cent between 1990 and 1995.

In relative terms, the greatest increase in global integrator employment has taken place in Italy, Spain, Ireland, Denmark and Austria. In absolute terms, it is in the United Kingdom, Germany and France that the global integrators experienced the largest increases in employment between 1990 and 1995. Thus DHL, which has been established in France since 1976, has been transformed in a period of 20 years from a medium to a large scale enterprise, with staff (1,300 persons) increasing by 60 per cent in four years. DHL employs 53,000 persons of various nationalities throughout the world. The global integrators in all the EU countries expect to increase employment over the next five years, and in most countries these increases are expected to be significant (between 5 and 20 per cent) or very significant (over 20 per cent).

These recent trends, however, make it very difficult to identify the jobs created in the traditional telecommunications sector. Demarcation lines are increasingly blurred between the new services, computerization, audiovisual activities, the traditional telecommunications services, and the postal services. Despite forecasting efforts, there is still a lack of new statistical tools or even a classification grid based on occupations. In such a fluid economic sphere, where a number of small or medium enterprises have recently been created, the quantitative and qualitative evaluation of employment is difficult to determine in the short term.

2.4  Future employment prospects

What is evident is the creation of jobs accompanied by the suppression of other jobs. But this evolution in employment, which has been noted in many other sectors of the economy, seems to be occurring at a particularly rapid pace in telecommunications and related sectors, making any analysis of redeployment rapidly obsolete.

According to a recent study on privatization in the telecommunications industry carried out for the ILO by Professor A. Verma of the University of Toronto (Canada), a two-stage change in employment is occurring in this sector.

During the first phase, which could be described as one of rationalization, the traditional operators may lose between one-quarter and half of their staff, mainly in occupations which have been made redundant by technology or "externalized" following a refocusing by operators on commercial and high value added services. Automation and the transfer of manual activities to a subsidiary accompany this structural adaptation to the new technological and regulatory environment. A reduction in the number of hierarchical levels to provide a rapid response to the customer needs is also current practice.

After this initial period of economic change and the often massive reduction of the workforce comes a second phase, which consists of a change in the nature itself of employment. In this phase which is appearing in particular in the United States, permanent adjustments and redeployment follow one another at a brisk pace according to the changing structure of markets and alliances between operators. There is no longer any sudden broad reduction in employment but a continuous renewal. Workers must adapt to emerging techniques and the new demand through permanent training and the updating of their skills. They must manage their internal and external employability which in the absence of any fixed status contributes to their general job security. The role of training and know-how becomes of central importance to employers as well as to employees and their representatives.

This view has begun to emerge in the Anglo-Saxon countries which pioneered liberalization, but which were also the initiators of greater flexibility on the labour market. Its effects must be differentiated in the case of operators which opt for a gradual natural wastage -- or maintenance -- in the level of their workforce during the first phase, and lesser flexibility during the second. Despite the fairly strong convergence already noted in this sector, it would seem hazardous at this point to suggest that the changes under way in the Anglo-Saxon countries will be reproduced identically throughout the world. Meanwhile, doubts remain about the scope and duration of the first phase. Indeed, according to the above-mentioned BIPE Conseil study on the effects on employment of the liberalization process in the European Union, "even dominant operators in countries where the deregulatory process began early or was particularly keen will see additional redundancies. We therefore assumed that BT will experience another 45,000 to 55,000 redundancies, depending on the scenario chosen, from now until the end of the century. This forecast is consistent with others made by (other) ... institutes."(2)

Another study carried out for the ILO by Professor H. Hudson of the University of San Francisco states that the tendencies in employment noted above in various OECD countries should be subsequently observed in the other countries as their markets and basic infrastructures reach maturity. Here again, it would be hazardous to assume that the two-phase scenario described above will occur everywhere in the same way. On the contrary, this two-phase movement in the evolution of employment could be accelerated -- even bypassed -- in its first phase in various countries as a result of new techniques (satellites, mobile telephones, alternative enterprise infrastructure) allowing some regions to save on complete telegraphic infrastructure -- as well as a desire for rapid withdrawal by States for budgetary reasons.

Furthermore the second phase presupposes on the part of employees a solid general training and assistance from their employers, two conditions which are far from having been met on a broad scale.

2.5  The impact of structural and regulatory
changes on the legal status of employees
and occupations

For a long time it has been considered in many countries that the postal and telecommunications occupations justified the employment of public employees or agents to carry out tasks of general interest. The very large majority of staff in the postal and telecommunications services have therefore enjoyed the status of civil servants and all the related guarantees. With the rapid development of privatization of the public services, however, a new economic doctrine seems to have emerged, that of the liberalization and segmentation into markets of public services previously considered as indivisible and not subject to market logic.

Budgetary restraints, political will and the poor quality of certain public services seem to have eroded a substantial part of the status of staff determined by legislation or regulations, in the telecommunications sphere. The postal services have been able to offer more resistance to this tendency for the reasons explained in Chapter 1.

2.5.1  Changes in occupations: A creative destruction

The report on technological change and workers' participation prepared for the 1991 meeting of the Joint Committee for Postal and Telecommunications Services already gave various examples of occupations which are on the way out: operators of manual telephone exchanges, traditional fitters and linesmen, staff of telephone directory inquiry services affected by computerization and the introduction of electronic directory service, workers in manual sorting stations and clerical employees whose daily jobs are increasingly performed by office machinery.

The evolution of occupations has increased since the beginning of the 1990s, and totally new functions have appeared, in particular those related to access services to the Internet or multimedia. These new occupations are accompanying the development of new services described above (2.3.3).

Not only are new occupations appearing, but the separation line between various occupations and some branches is becoming blurred with computerization encouraging versatility and distance work. In this respect Italian experience with telework in the telecommunications sphere is indicative of current responses to the evolution of labour law vis-à-vis the new technologies. During the Symposium on Multimedia Convergence organized by the ILO in January 1997, Professor Marco Biagi pointed out that under the current Italian legal system there are certain obstacles to the introduction of telework. According to the provisions of a law passed in 1970, management cannot use audiovisual and similar equipment for supervising and controlling employees at a distance. The law also states that these legal restrictions can be removed only on the condition that a collective agreement is reached. At present there are only a few such agreements, the most significant of which concerns the introduction of telework at Telecom Italia, where a company-level agreement was negotiated and signed in 1995. Telecom Italia initiated a home teleworking project to redeploy staff who would otherwise have run the risk of being dismissed. The management made the strategic choice of grouping directory information operators in a number of southern Italian towns, where the risk of redundancy had been high. The operators work from home on a part-time basis and technically speaking, their employment contracts have been converted from classical full-time employment contracts into half-time jobs. After three years of teleworking, an employee may request a return to office-based work. Both unions and management hope that teleworking will prove popular with employees and that it can be extended to other services.(3)

According to the BIPE Conseil study on employment in telecommunications carried out for the European Commission, operators are predominantly confronted, in the same way as new entrants, with the need for qualified staff who can combine skills in the spheres of commercial and technical functions, software designers and network managers.

2.5.2  The legal status of employees: A destructive erosion

As the general report for the Joint Committee for Postal and Telecommunications Services noted in 1991, job security has been sacrificed in the process of structural reform, resulting in an increase in the precarious nature of employment in the communication services.

The move from a technological and/or public service logic to a commercial logic is to a large extent governing restructuring in the communications sphere. The organization of enterprises (including postal services) by type of market reflects the priority given to the client over functions of general interest. Of course the public service functions and the interest accorded to the client may coexist within the same enterprise or the same establishment, as Chapter 1 made clear as regards the concept of universal service, but the consequences of such an evolution appear to be considerable for the status of employees and the manner in which they exercise their occupation. Commercial management has acquired importance and particular attention is now being given to sales and marketing strategies.

Thus in Portugal, the new structure of the traditional telecommunications operator is based on the creation of units by type of client and geographical area, accompanied by a reduction in the number of hierarchical levels and the establishment of a performance evaluation system by unit.

The new organization of enterprises is also characterized, as noted earlier, by the transfer to subsidiaries of various activities. This means, as in British Telecom, that the status (in the broad sense of the term) of the staff of the traditional operator is not extended to an increasing number of workers.

Such a change, which is characteristic of the 1990s, has particularly important effects on the management of human resources since many traditional operators have existed for several decades and still follow the procedures and practices of the public sector. Furthermore, the public status of workers in the postal services still often remains close to that of the civil service, and that of telecommunications employees is not disappearing systematically with the liberalization of the sector. In addition, even if the two movements are related, liberalization and privatization do not always occur at the same time. Several scenarios are possible: the sudden replacement of a public status by private work contracts, or the programmed gradual elimination of the public status -- with appropriate financing, in particular as regards retirement -- or the coexistence of employees or staff with a special status alongside employees subject to common law and even precarious workers.

The head of Deutsche Telekom recently expressed the view that the new breed of top management often wants to see their enterprises move from an administrative status to that of a multinational on markets opening up to competition, in particular through a reduction of hierarchical levels and greater proximity to customers. In fact, the privatization of Deutsche Telekom, which is part of the national and European move towards the rapid and total opening up of competition (in 1998) and progressive privatization, is typical of this end-of-century mood which characterizes the telecommunications sector.

Unlike the situation in France Telecom, where trade unions managed to ensure that permanent workers would be recruited up to 2002, the recruitment of public employees has been halted in Deutsche Telekom since 1995. But unlike British Telecom, where employees are all subject to private law, Deutsche Telekom staff with civil servant status (Beamte) (approximately 54 per cent of the total workforce) were given the opportunity of remaining public employees or becoming contractual workers. Furthermore, all employees continue to benefit from job security if they are more than 40 years old and have 15 years of service.

In Sweden, following the conversion of Televerket into a telephone company (Telia), workers benefiting from statutory terms and conditions of employment (those employed before 30 June 1993) have been subject to major changes. Since 1 July 1993, all staff in Telia are employees subject to common law. Employees were given two options: either to renounce their status as public employees (a condition of obtaining employment with Telia), or to retain their status as public employees, in which case they were placed in a phase-out structure of Televerket, which will be subsequently liquidated. However, most workers who were public employees did accept employment with Telia, while about 60 workers who opted to remain public employees have been placed in the phase-out structure pending a solution to their future employment.

The 16,500 employees of Tele Denmark have, on the other hand, retained their civil service status. The same is true in Luxembourg, where the transformation of the post and telecommunications administration into an enterprise in 1992 has not resulted in the termination of the civil service status of its employees. However, new employees have since been recruited on private contracts.

In Switzerland, the reform of the post and telecommunications services would allow postal staff to retain their status as civil servants (becoming "staff of the Confederation") from the year 2000; on the other hand, the staff of the telecommunications enterprise would be subject to private law and governed by a collective agreement -- to be negotiated -- from 1 January 2001.

The staff of the public enterprise Korea Telecom are recruited by competition and jobs are classified into eight groups. But there is a secondary status for approximately 10 per cent of the employees in local establishments, most of whom perform unskilled work.

When the Department of Telecommunications of Malaysia was transformed into an enterprise (Telekom Malaysia) in the 1980s, all the staff were transferred into the new publicly owned company, with job stability guaranteed for five years. Subsequently, in the 1990s, employees whose work had become obsolete (manual operators, accountants) were redeployed. On the other hand, analysts and programmers were recruited.

In Benin, the Posts and Telecommunications Office (OPT) plays an important role within the development of an economy centred around services. Formerly a state administration, the OPT was transformed into a public enterprise in 1989. But it was only in 1996 that it was possible to conclude a collective agreement which allowed the body to free itself of the rules of the public service in the management of its staff. A new classification of jobs and a wage grid were established with a view to providing greater flexibility in the management of human resources. This could be a prelude for the opening up of the capital of the public operator.

A similar trend has been observed in various public postal services. Civil servants in Sweden and Finland, for instance, found themselves subject to ordinary employment contracts as a result of corporatization in 1994. Post Denmark expects to phase out civil servant employment status by 1998. In Austria, a new law was passed in 1996, establishing that all future public postal operator employees would be employed under ordinary contracts. Apart from these examples, four other EU countries (Belgium, Ireland, Netherlands and United Kingdom) do not have or no longer have any civil servants in their public postal operators.

* * *

One of the main characteristics of the liberalization described in Chapter 1 is therefore the revoking of the status of employees governed by public law, at least in telecommunications. In the postal services, mention has already been made of a decline in the recruitment of civil servants and the corresponding recruitment of employees on fixed-term or part-time contracts. It is clear that this gradual abandoning of the civil service status of telecommunications workers does not affect certain countries, such as the United States or Canada, where such staff have never had their status defined by legislation or regulation.

The rigidity (whether real or supposed) of such a status is often considered an obstacle at a time of globalization, whereas flexibility in staff management and the greater flexibility of the labour market are widely advocated. The arguments about economic efficiency may have masked the budgetary reasons for social deregulation, with the abrogation, erosion or bypassing of the public status of employees liberating funds to make up for public deficits.

Similarly it could be argued that if the universal service and general interest missions can be guaranteed by private enterprises as well as by public operators -- through a complex re-regulation to construct a competitive landscape -- it becomes difficult to defend the particular status of staff against the application of general labour law. Here again, those who advocate the elimination of the civil service status could argue that the general interest mission and the public status could be decoupled. Those who oppose such a privatization may argue that one of the primary -- if not the primary -- reasons for the special status of public servants responsible for delivering a universal service, in their capacity as civil servants or their equivalent, is to preserve their independence and impartiality in respect of political, ethnic, religious or other kinds of pressure. General legislation in a country governing private sector workers may not be sufficient to ensure independence from such pressure.

It has furthermore been argued that the very nature of private profit-making enterprises leads them to search for the most profitable operations which do not necessarily match those inherent in a universal service.

One kind of logic may mean that civil servants are assigned only to workplaces linked to tasks of general interest, but the division of occupations on such a basis, and which is necessarily progressive, is not an easy one. In addition, it would seem technically and socially difficult to compartmentalize jobs, occupations and careers within the same enterprise.

In the Netherlands, "cultural incompatibilities" arose in KPN between new employees, who are paid attractive salaries, and civil servants already in service, which has led to disputes which in some cases have been resolved by departures or internal transfers.

In France, within the same public telecommunications enterprise (as furthermore in La Poste), civil servants coexist along with employees with contracts of employment. The transformation of France Telecom into a commercial company from 1 January 1997 thus posed a problem of career management, since the termination of the recruitment of civil servants (from 2002) might put an end to any career prospects for civil servants. An agreement was therefore signed between the enterprise and four trade unions in January 1997 which stipulates that civil servants (who make up 90 per cent of total staff) and employees governed by collective agreements should have the same career opportunities, depending on their skills and aptitudes. Each year a promotion balance sheet must be drawn up with the trade unions. This management of civil service status along with that of employees subject to common law must also be reconciled with the transformation of occupations in the enterprise. France Telecom has decided to set up an "occupation institute", with the rapid redeployment of staff towards commercial occupations on a voluntary basis. Furthermore, a reform of the classification of staff has resulted in a significant reduction in the number of categories. The 15,000 staff who have not accepted the reclassifications have been given a period for their retraining and staff refusing to relinquish the former remuneration schedule applicable to the public service will be proposed redeployment in state administrations in the hospital and local administrative sectors.

There is often, in cases where the public status subsists, a sort of "privatization" of the rules of the civil service, since the traditional link between the particular status of employees in communications and the general status of civil servants has been progressively broken through new classifications based on new methods of job evaluation, individual forms of remuneration, financial participation in results, disbanding of the discussion bodies characteristic of the public service, etc. This mixture of public and private management, which will be discussed in the following chapter and which is being established alongside the joint composition of capital, may give rise to a problem of staff identity, and hence worker motivation.

Finally, with account being taken of this drawing together of the public and private sectors coupled with the abandoning of the civil service status, it might be argued that in enterprises (or groups of enterprises) in which statutory public employees and staff covered by a collective agreement or without protection coexist, the dividing line concerning protection in employment lies in differences between employees with a precarious contract of employment and employees with contracts of unlimited duration rather than between employees with a public status and other workers.

However, staff in the postal and telecommunications services are not only subject to the more or less rapid disappearance or "privatization" of their public status. A second equally important trend consists of the outsourcing of entire occupations and the transfer of a number of workers to subsidiaries of the traditional operators of the postal and telecommunications services, in which workers with a low level of unionization do not enjoy the status of employees in the parent company, which permits a flexible management of staff, similar to that practised by new entrants.

2.6  The impact of structural and regulatory
changes on female employment

Although difficult to assess precisely, the repercussions of structural and regulatory changes and globalization in the communications sector on female employment might be important in the medium/long run for various reasons. The postal and telecommunications services have traditionally been large employers of female workers. In the process of restructuring and regulatory changes, female workers have been confronted with new conditions of employment which have both positive and negative implications. In addition, female workers have often been segregated into low-paying and lower skilled positions. Their rights as wage-earners as well as their representation at the workplace have often been limited in many countries. In the last decade, equality between male and female workers has been a permanent item on the social agenda. Many operators have also taken necessary measures, including training and retraining, to secure the employment of female workers who had been at risk during the restructuring process. Some level of labour flexibility in both sectors has been maintained, and often enhanced, by the increasing use of part-time workers, including more and more women.

In telecommunications services, women have in the past often worked as operators providing a manual connection between lines, a task which required much physical and mental concentration and conversation with customers and other operators. As a result of technological and structural changes, however, this manual process has been replaced by electromechanical switching systems, and more recently, by digital switching systems. With the continuing introduction of more automated switchboards, a large number of operating staff have thus become redundant. The development in Malaysia is fairly characteristic of the general trend in the employment of women in telecommunications: although women are increasingly holding poorly remunerated jobs in the administrative services or as operators, they are beginning to take up technical or management jobs and there is a trend towards redeployment in commercial postal services. Whereas in 1990 almost 25 per cent of employees of Telekom Malaysia were women (mostly employed at that time in data entry operations, administrative jobs or as operators), since then women with technical or commercial skills have been increasingly sought.

Given these new conditions, there had been a general assumption that overall employment levels would drop as a result of these changes, but in fact redundant female employees in some countries have been successfully retrained and redeployed in newly created jobs in network planning, management, marketing and customer services.

The same conditions apply to postal services where automated sorting systems have become increasingly used and electronic communications of all kinds are growing faster than ever. Thus, in the European Union, women's share of employment increased from 18.9 per cent in 1990 to 24.6 per cent in 1995 among the public postal operators. Except for Finland, where women's share of employment has remained unchanged, the figures have increased in the public postal operators of every Member State.

Thus in the German postal service, for reasons related not only to structural and regulatory changes, there is expected to be an increase in the number of part-time employees, many of whom are women. Furthermore, Deutsche Post is the country's main employer of women workers.

In the Netherlands the proportion of women in the workforce increased by 0.83 per cent per year between 1989 and 1993, and women represent, as in the case of many other traditional postal service operators, a substantial part of part-time employment (47.5 per cent of the total workforce in the Netherlands Post in 1995 were part-time workers, compared to a European average of 13.5 per cent).

In the global integrators, the proportion of women is also increasing in the European Union, although as transport enterprises, these operators have a more male-dominated structure of employment in some basic occupations than is the case with the national post services (see figures 10 and 11).

The constant improvement in the level of education and training of women in various regions of the world is likely to open up access to new functions, in particular of a technical, commercial and managerial kind, in many enterprises. The reorganization of working time and the development of the information society -- which is substantially based on individual skills, experience and talent -- should encourage the growth of female employment in the emerging or future new services.

Figure 10. Proportion of women employed in public postal operators in 1990 and 1995 (European Union)

Women in management positions

These factors have contributed to an increasing share of women in managerial, professional and technical jobs, although their share still remains low. This is true for the postal and telecommunications services as for other sectors of the economy as well.(4)

In some countries, such as the United Kingdom, significant increases of employees in middle and higher management jobs occurred during the 1980s and early 1990s. Despite the continuing low level of women in such employment, the number of female engineering technicians, for example, increased from 0.6 per cent to 2.9 per cent between 1981 and 1992. In Deutsche Telekom in 1995 women accounted for 17.6 per cent of "middle" service posts. In France, women occupied 23.1 per cent of total managerial posts at France Telecom in 1995, with 2,349 women (20.8 per cent) in top positions; in the postal services, women's share in managerial positions was 27.5 per cent in 1995. In Ireland, in 1995 women held 161 of the 1,318 managerial posts in telecommunications services (12.2 per cent) and 76 out of the 789 managerial posts in the postal services (9.6 per cent). In Hungary, women held 54.4 per cent of managerial posts in postal services in 1995, and in Italy 20 per cent of the 68,250 managerial posts in the postal services in 1995. In Malaysia, 6.1 per cent of women working at Telekom Malaysia in 1990 were in the executive category.

Figure 11. Female employment as a share of total employment among global integrators in 1990 and 1995 (European Union)

2.7  A new approach to recruitment and training

Although recruitment and training policy directly affects the new structure of employment in communications, it is difficult to identify what results from structural and regulatory changes, as distinct from technological change. But the earlier observations on the structure of employment and the evolution of employee status suggest that there is an accompanying strategy of recruitment and training.

In the context of structural and regulatory adjustment, under the impetus of privatization and international competition, it is natural for the postal and telecommunications services operators, whether public or private, traditional or new entrants, to try to adapt their human resources to the new technologies, new structures, markets and methods of marketing their services. Given the accelerated pace of globalization in the communications sector, it does not seem to be an exaggeration to say that there is a certain global convergence in the profile of employees being sought and the kind of training provided, even if the resources and the traditions of enterprises in the sphere of training vary considerably. In this connection, the major international operators active in the developing countries have a particular responsibility concerning the transfer of skills and know-how. Given the role of communications in economic development, it is also incumbent on the competent international organizations to facilitate training -- and the retention of highly qualified staff in the least developed countries.

For employers, it would seem that the question of staff training now concerns the capacity of permanent adaptation by their employees to meet the changing needs of clients and technical developments. Although more marked in the telecommunications sector, this concern can also be found in the postal services, in which employees are increasingly being called upon to carry out occupations which vary throughout their career. The synergies between the postal, financial and savings activities, which are being strengthened by the computerization of post offices, are emphasizing this internal mobility. In the flexible structures made up of young, interdisciplinary teams and unstable markets, the selection of employees is generally based on criteria concerning their capacities for human relations and teamwork, versatility and willingness to accept horizontal mobility as well as their interest in continuous training.

Both private and public postal operators emphasize the need for continuous training and development and some have taken considerable steps towards achieving this goal. Both private and public operators have similar training needs focused on customer service skills, leadership, and people-management skills. While apprenticeship systems are important in telecommunications very few of the public postal operators seem to operate such schemes.

Highly trained personnel are not only necessary for building a modern postal sector, but for developing markets and services and participating in market competition. China Post for instance has in the past few years placed considerable emphasis on the education and training of its managerial staff and employees. It has established an Academy of Postal Research and Planning, the Shijiazhuang Postal College and several training centres for senior postal management staff and post-related planning and specialized research. A number of vocational schools and training centres have also been set up by the provincial and municipal postal authorities to increase technical and service education and training among managers and employees.

New training programmes have been or are being introduced in the postal services of Sweden, the United Kingdom and Portugal. An important objective of the programme of Swedish Post, which covers 1,000 managers, is to increase understanding and cooperation across the different business units of the service, with a commitment to providing five days of training per year for each employee. The United Kingdom Post Office is currently negotiating the introduction of a similar policy. The Portuguese postal service is also considering new forms of training in order to maximize the impact on working practices and attitudes.

In France La Poste devotes a certain percentage of its payroll to staff training. According to the Price Waterhouse report prepared for the European Commission, noted earlier, two global integrators operating in the EU have also made a commitment to spend a minimum percentage of their European operations on training. Private postal operators also emphasize training and human resource development, in part due to extensive labour turnover and the higher initial training costs of new employees.

In the telecommunications sector, training is seen by many operators as an essential means of restructuring the labour force and as a social complement to restructuring. Training programmes encompass a wide range of subjects, which reflect the complexity of the restructuring process.

Following the liberalization of this sector in Norway, Telenor's training programme has been modified, with internal training focused on specific courses in such areas as new technologies, customer services and management training. In Finland, the rapid reduction of staff within the two main telecommunications operators (Telecom Finland and Finnet), has resulted in a gradual transformation of skill levels. In 1996, 25 per cent of the workforce had received basic training, compared to 39 per cent in 1987. On the other hand, the proportion of higher education graduates increased in a similar proportion during the same period. It is essentially Telecom Finland which has reduced its workforce, however, by dismissing on a priority basis network installation staff and administrative staff.

In Telecom Portugal, the objective is to select workers capable of learning to keep abreast of new developments and technology in the market. Internal recruitment remains, but with a strong emphasis on horizontal mobility despite open resistance by the workers. External recruitment is made mainly through fixed-term contracts, sometimes on a selection basis after probationary periods.

Deutsche Telekom is reorganizing the internal training of its staff by refocusing on client needs and reducing programmes dealing with technology, with special reference to restructuring and the future rather than the management of departures or internal mobility. In the commercial as well as in the technical or management sectors, there are diploma-awarding continuous training structures which function under the auspices of the State. The qualifications required enable participants to hold posts within Deutsche Telekom, but the operator hopes that some of the workers trained in this way will be recruited by other enterprises.

Employees at British Telecom receive training on customer relations and call-handling techniques. In Greece, the training system of the traditional telecommunications operator has been reorganized to meet the demands of restructuring by lengthening the period of training, enhancing the skill requirements of teaching staff and improving pedagogical documentation, planning and evaluation of training. A training unit focuses on customer relations. All these measures, which are integrated into a general policy, seem to be aimed at maintenance of employment at OTE.

In Australia, the traditional operator Telstra has introduced training programmes to increase the skill level of employees in the technical, management, marketing and customer service sectors.

In some cases training has been centralized through special schools or agencies. Thus, in France, an Act of July 1996 transferred to the State the responsibility of higher education in the sphere of telecommunications and placed the grandes écoles, which train engineers and managers, under the supervision of the Minister responsible for telecommunications. The mission of the recently created group of telecommunications schools is to provide higher education in telecommunications and information technologies. Access to each of the three schools is by competition. Similarly, in Sweden, the reorganization of Telia in 1993 led to the establishment of a department of training, with a view to ensuring internal mobility and preparing staff for other careers as an alternative to dismissal. Telia has established a genuine "employment agency" to address the difficulties resulting from successive restructuring. In Belgium, a collective agreement of 1996 refers to the objectives for proceeding with the operation of deployment in the postal services. Substantial amounts of financial resources were mobilized to allow some 6,000 employees to benefit from retraining and reskilling, although redeployment is sometimes limited by the mismatch between skill requirements in jobs that have become redundant and those of new jobs.

In Sri Lanka, as in other developing countries, training infrastructures are inadequate to deal with the modern training needs of employees. The training centres have thus received assistance from the ITU (through its Telecommunication Development Bureau) which has provided experts and equipment to facilitate the learning of new technologies, management, customer service or accounting. Regional seminars on information technologies have also been organized by the ITU. In Brazil, Embratel provides vocational training in the country and abroad, and organizes exchange programmes with technical schools and research institutes.

As the President of the National Union of Telecom Employees of Malaysia stated during the ILO Symposium on Multimedia Convergence, "telecommunications is the largest growth area in the Malaysian economy (...). Malaysian telecom network operators are eager to upgrade the network and also to create a pool of workers who will be multiskilled. The newly commissioned Telecom University, the University of Malaya and the various technical colleges are offering courses which teach the applications of new technologies. Multimedia is a "hot" subject among students who know that whatever field they major in, they will need appropriate technical knowledge as well."(5)

During its restructuring process, NTT of Japan has trained 50,000 to 70,000 employees per year in the priority areas of commercial services. Emphasis has also been placed on the use of computers and training selected by employees, with financial assistance from the enterprise. The distinction formerly made between recruitment at the national level and local recruitment for graduates of higher education, and which even in the 1980s still resulted in preference being given to the careers of staff recruited at the central level, has been eliminated with the liberalization of the sector, and replaced by open competition between employees at the national level in accordance with their abilities to adapt to new occupations.

Unlike Japan or the European countries, for example, in which mobility between telecommunications firms remains fairly low, the United States and Canada have experienced -- because of the previously private nature of their operators and worker habits -- a fairly large mobility of labour. In such a context and with account being taken of growing competition, it is easy to see why enterprises are reluctant to train employees in strategic subsidiaries, since such training is always likely to benefit, one day or another, a competitor. Some United States enterprises are thus reluctant to train their employees in new technologies. The CWA trade union and AT&T established, as far back as 1986, a special body (Alliance for Employee Growth and Development) to examine this question. Not surprisingly, one of its conclusions was that the more a company invests in the training of its employees, the more the latter feel involved in their enterprise.

* * *

It is too early to make a precise assessment of the impact of structural and regulatory changes or of globalization on employment in this sector. These elements are part of a continuing process and are closely interrelated. In particular, the impact of the development of the private sector in postal and telecommunications services is at this stage difficult to assess.

New employment opportunities have emerged while traditional jobs are being eliminated. The status of public employees which is being increasingly challenged and circumscribed, has been retained in certain cases. However, for newly recruited employees, it may be difficult -- if not impossible -- to acquire such a status and to achieve the level of protection, guarantees and benefits which present staff in many postal and telecommunications services still enjoy.

Efforts are under way among the traditional operators to retrain and redeploy staff who would otherwise become redundant and a series of measures -- some of them quite innovative -- are being applied to mitigate the negative social consequences of such changes.

The ILO Joint Meeting on the Impact of Structural Adjustment in the Public Services (Efficiency, Quality Improvements and Working Conditions), which was held in 1995, stressed in its conclusions that "... continuous staff training is critical to adapt skills for future organizational needs, improve individual job satisfaction, redeploy staff, enhance career and employment prospects and take advantage of technological progress, thereby realizing the objectives of efficient and effective delivery of quality services to meet citizen expectations".(6) These trends might well be the beginning of a major transformation in societies as a whole and will be examined in further detail in the following chapter.

1.  ILO: Technological change and workers' participation in posts and telecommunications, Report II, Joint Committee for Postal and Telecommunications Services, Second Session (Geneva, 1991), p. 44.

2.  The effects on employment of the liberalization of the telecommunications sector, prepared by BIPE Conseil on behalf of the European Commission (Brussels, 1997), p. 78.

3.  ILO: Report of the Symposium on Multimedia Convergence (Geneva, 1997), document GB.270/STM/1, p. 93.

4.  cf. ILO: Breaking through the Glass Ceiling: Women in Management, report for the Tripartite Meeting on Breaking through the Glass Ceiling: Women in Management (Geneva, 1997).

5.  ILO: Report of the Symposium on Multimedia Convergence, op. cit., p. 37.

6.  Final Report, document JMPS/1995/10, p. 22.

3. The impact of structural and regulatory
changes and globalization on
labour relations

3.1  Introduction

As a point of convergence between various political, economic and social movements, labour relations in the 1990s are undergoing the twofold effect of the redefinition of the role of the State -- and more generally public bodies -- and the globalization of the economy. Although this twofold process does not date only from the beginning of the 1990s, it has accelerated to the point that privatization and the social aspect of the globalization of the economy have become major subjects in social relations and in the ILO's work. The World Labour Report 1997-98 states that the globalization of the economy has been accompanied by common trends in the practice of industrial relations and that "economic globalization and technological innovation appear to have considerably reduced the manoeuvrability of States ... The usefulness of collective bargaining is being challenged ... Globalization and technological change are clearly proving disruptive for national industrial relations systems ... The unquestionable decline in national policy autonomy ... is prompting States increasingly to transfer to enterprises functions previously largely performed at the national level, giving rise to a corresponding increase in enterprise autonomy."(1)

Along the same lines, the Report of the Director-General of the ILO to the Twelfth Asian Regional Meeting in Bangkok (December 1997) points out that industrial relations have traditionally "sought to achieve collective outcomes at the national, sectoral or industry level, which are then applied to each enterprise. But along with globalization, information and process flows made possible by new technology are building inter-enterprise networks around the world, calling into question the traditional boundaries of the enterprise and eroding current IR collectivist arrangements."(2)

* * *

The structural and regulatory changes which have occurred in the communications sector are so broad that they call into question social habits and sometimes longstanding bargaining techniques. While conditions of work (with the exception of remuneration) have been more affected by technological or social change than by structural and regulatory change or globalization, the same is not true as regards the rules and practices which regulate relations between employers and workers, in particular collective bargaining.

Economic competitiveness depends increasingly on the way in which enterprises and collective bodies develop their human resources, by ensuring the internal and external employability of their staff. The new forms of organization of work, which make increasing use of information technologies, are widely applied in the postal and telecommunications services. They are characterized, as noted earlier, by a decentralization in human resource management, the division of enterprises according to markets or types of clientele, flexibility of work schedules to provide services to clients and the establishment of profit centres.

Figure 12. Framework for analysing the impact of globalization on industrial relations

3.2  The role of the social partners

New global, social and economic trends, such as the rapid expansion of information technologies, the progress made in regional integration, and the development of tertiary employment, both fragmented and feminized, are all disrupting the bargaining and dispute settlement systems developed in previous years.

The social actors are searching for new strategies which often call into question traditional frameworks such as occupational branches, enterprise agreements or "typical" employment contracts. In the postal and telecommunications sphere as in other service sectors, the new strategies of the social partners are based on their respective approach to liberalization, globalization, privatization and the constant need to adapt to technological change.

3.2.1  Social actors in search of new strategies

In various regions, public service enterprises in the post and telecommunications sector are, or have acted as, social laboratories for innovative human resource policies. Sometimes these enterprises, which are often still public or semi-public, also constitute one of the last bastions of mass trade unionism. This circumstance explains in part the extent of the resistance encountered in some States towards privatization and liberalization, with the trade unions present in the public enterprises preferring to exert pressure on the government at the same time as on management.

Countries which have forms of "business unionism", private operators or an individualist culture are characterized by practices based on individualized human resource management (Canada, United Kingdom, United States). Within this framework, AT&T encourages the involvement of its employees through quality circles, self-management and quality of life at work programmes. In the same way, British Telecom has introduced a total quality management programme to deal with its changes and improve the quality of service, in preference to collective bargaining. Those countries which have a more collectivist culture of industrial relations have adopted practices based on collective bargaining (Germany, Norway, etc.).

The new communications enterprises which have been recently created or the result of the dismantling of the traditional operators are naturally inclined to use individual human resource management rather than collective bargaining. They are freer to develop their own staff management techniques based on teamwork and customer service, in so far as there are no or few trade unions and they are not (or no longer) bound by existing collective agreements. Thus the new entrant Optus in Australia has developed an organizational structure based on employees as individuals.

The scope of the reforms reviewed earlier (liberalization of many services, changes in status, privatizations, refocusing on clients, decentralization of management, reduction of hierarchical levels, new classifications) have modified the balance of power and the approaches adopted by the social partners. The initiatives of the State as employer, or heads of enterprises, are designed to provide a quick response to the market demands to which operators -- and their staff -- must adapt if they are to retain their competitive positions.

These changes in orientation seem sometimes hardly compatible with a long period of bargaining or a codified consultation process. The techniques of associating employees in decisions have developed, if only as a result of the modification of their status and the shareholder change in the traditional operators. Other elements seem to lead everywhere to more flexible and decentralized bargaining.

The new entrants in the postal and telecommunications service markets are evolving in most cases through the use of flexible staff and structures and often have a comparative advantage, at least in the short term. The rapid adaptation of these new enterprises can make them more likely in tactical terms to conquer the emerging markets. The enterprise culture of these new entrants therefore tends to be reduced, at least at the beginning, to their adaptability with regard to markets and clients.

The enterprise culture of the traditional operators on the other hand is still often characterized by the former links with the State, which are becoming blurred only progressively. Often these traditional operators have helped develop a social model, particularly in Europe, which is now being called into question by liberalization and globalization. Two kinds of logic therefore seem to be operating: one, which is territorial, social and often defensive, and the other, flexible and expanding, apparently in tune with liberalization and globalization.

While the management of communication service enterprises has the capacity to establish strategic alliances, to merge together or exchange subsidiaries, an increasingly international response is emerging from the trade unions, which is likely to refocus the balance of power regarding the social management of globalization.

In Europe, Communications International (the former PTTI) is negotiating with employers in the telecommunications sphere through the Joint Committee on Telecommunications with a view to the adoption of joint positions. This is one of the specificities of the European social dialogue. During a seminar on the impact of the liberalization of telecommunications in Europe which was held in November 1996 in Portugal, Communications International representatives wanted the European social partners to conclude a collective framework agreement in the telecommunications sector.

In the long run, the branch could be a field for the application of real European collective agreements designed to prevent distortions in competition on the basis of wage costs.

Regarding the proposed fusion between British Telecom and the long distance United States operator MCI (a proposal which has been called into question at the time of the drafting of this report, following the recent acquisition of MCI by the United States enterprise Worldcom), the trade unions affiliated to Communications International have pointed out that 130,000 employees of the British operator are union members and that the company has set up a European group committee, whereas MCI has had poor relations with the trade unions. All the trade unions concerned have given considerable attention to the social consequences of this gigantic operation, typical of the globalization of the economy (as is the massive bid from Worldcom to purchase MCI).

For many trade unions, the globalization of the economy should in fact be accompanied by a global social policy based on the law of social progress rather than the alignment of social regulations of the global operators on those of the least socially advanced parties. Otherwise, mergers between enterprises could result in social upheaval.

In the Republic of Korea, the Korea Telecom trade union was set up in 1982, the year of privatization. Its members previously belonged to the trade union of the postal service, since Korea Telecom resulted from the dismantling of the Ministry of Postal Services and Telecommunications, with most of the latter's employees in the telecommunications sector being transferred to Korea Telecom. Thus a trade union which before privatization had played an important role within the federation of trade unions of the postal and telecommunications public sector managed to become the trade union of the privatized enterprise. The opinion of the trade union was, however, not really taken into account during the privatization process and the participation of employees in this change seems to have been a small one. Most of the trade unions were probably in favour of privatization, given the significant improvements as regards wages which the operation would involve.

The new strategies of the social partners must also take account of the partial disappearance of the frontiers between the public service and the private sphere. Thus the contract concluded in 1997 between the United States Postal Service and the Emery Worldwide Airlines transporter -- to which reference was made in 1.1.2.2 -- resulted in protests by the postal workers' trade unions, which believe that the establishment of priority mail distribution centres by the private transporter was motivated by financial reasons rather than a desire to improve service quality. Emery (15,000 employees in 98 countries, of whom 20 per cent are members of a trade union) is a typical case of a transport enterprise able to bring about, quite legally and even with the collaboration of the public postal service, the progressive erosion of services reserved to the latter. Such fears amongst postal service employees may explain a renewal of interest by employees in the trade unions. Thus between 1992 and 1997, the number of employees covered by union contracts at the United States Postal Service jumped by 13 per cent (from 651,104 to 738,604). The American Postal Workers Union believes that there are two factors which explain this increase: first, the 1993 agreement with the Postmaster General brought back to the agency thousands of letter-sorting jobs that the previous Postmaster General had contracted out to private industry; second, there was an increasing fear that many postal workers might be losing their jobs.

3.2.2  Trade unions and globalization:
Trade union strategic alliances?

Trade unions have been an internationalist movement from the outset and thus cross-border workers' organizations are therefore nothing new. But with the emergence of multinational enterprises, they have made every effort to step up this aspect of their activities, with unions responding to the increasing globalization of the economy by giving their strategies, activities, procedures and structures a new international dimension. However, as the World Labour Report 1997-98 points out, "there are many legal and practical obstacles to international collaboration between trade unions".(3)

Strategic alliances between operators could encourage parallel alliances between certain social organizations. Thus the proposed merger between British Telecom and MCI encouraged two British trade unions to form an alliance with a United States counterpart (Communications Workers of America (CWA)) representing some 600,000 workers in the United States. One of the British partners is the Communication Workers Union (CWU), most of whose members work for British Telecom; the other party represents telecommunications managerial staff (Society of Telecom Executives, 18,000 members). One of the objectives of this "trade union strategic alliance" is to exchange information in a sector which is undergoing rapid globalization and to establish complementary positions regarding social and regulatory policy. MCI is thus not the only target of this global social alliance. Other companies such as Rupert Murdoch's News Corporation, Cable and Wireless, AT&T, US West or Bell Atlantic are also targeted. For the CWU head of research, the priority is to prevent the MCI philosophy infiltrating into British Telecom. Another objective is to bring MCI towards a more tolerant position regarding the trade unions. For the latter, there must be a coherent industrial relations policy in global enterprises which are the result of mergers and acquisitions.

Similar initiatives might be taken in response to the formation of other alliances between operators (Global One, AT&T-Unisource, etc.) in as far as trade union culture and presence differ between the partners of these alliances. In this respect it is interesting to note that global action has been organized by several postal and telecommunications unions against Sprint, the United States long distance operator, and a member of the strategic alliance Global One, after the dismissal of Hispanic workers in San Francisco for allegedly wanting to organize themselves in a trade union. Communications International and the Mexican trade union STRM were also involved in this action.

As a result of multimedia convergence, several national trade unions historically representative in the postal and telecommunications spheres are likely to become communications and information trade unions. Thus the Independent Association of Publishers' Employees (IAPE), a trade union which represents approximately 2,500 workers responsible for Dow Jones stock operations in the United States and Canada, voted in favour of their representation by the CWA in the United States. The information sector continues to grow within the CWA, and already includes The Newspaper Guild, representing employees in television and radio broadcasting, publishing, computer services and other means of information. The wall which only a few years ago separated telecommunications from these other sectors no longer exists.

The German PTT trade union (DPG) and media workers' union (IG Medien) also intend to collaborate more closely, with the example of digitized television clearly illustrating the large overlap between the traditional spheres of competence of both organizations.

In Australia, the Association of Telecommunications Employees (ATEA) merged in 1988 with another trade union association to form the Australian Postal and Telecommunications Union (APTU) which itself became the Communication Workers Union (CWU) and, in the mid-1990s, the Communications, Electrical Plumbing Union (CEPU).

One of the resolutions of the 13th African Congress of the former PTTI (now Communications International) in 1996 concerned the globalization of the sector. African governments were requested to protect international networks from international piracy and to encourage regional integration. Communications International for its part affirms its intention to strengthen its collaboration with the other Internationals concerned by the information society and multimedia convergence and it has become a member of the International Committee of Entertainment and Media Unions (ICEMU) and mergers could even be concluded between it and the International Federation of Commercial, Clerical, Professional and Technical Employees (FIET), the Media and Entertainment International (MEI), and the International Graphical Federation (IGF).

3.2.3  Trade unions and the information society

The hypothesis on which the concept of the information society is based is the construction of a world information infrastructure, better known under the name of "information highways". This infrastructure is in fact the material support of the telecommunications systems of the future which should open up broad band width transmissions to households, enterprises and communities throughout the world.

For the public concerned by the restructurings of the 1990s and beyond, the communications industry provides an opportunity for observing the transformation of industrial nations, which are moving globally from an economy based on the production of goods towards one based on services and information. The communications sector is thus a laboratory and forerunner of future trends regarding the nature of work, the evolution of jobs, conditions of work and labour relations.

The information society also poses risks to workers' rights, to which the social partners should remain attentive (sources of social isolation, the growth of the contingent workforce, non-measurable effective working time, fragmentation or fusion of occupations and careers, reduction of social protection, inadequate conditions of work) but its development will also result in the establishment of a genuine international communications network between the social partners and between people themselves, which is likely to strengthen economic and social democracy.

As was made clear during the ILO Symposium on Multimedia Convergence in January 1997, trade unions have few reference points, in terms of social law, in the sphere of new technologies and the trend towards the internationalization of trade in services. It is clear that the decollectivization of labour relations which these changes bring about will result in a progressive restructuring of workers' associations, the scope of which over time is still unknown. In its working document for this symposium, the ILO pointed out that the transition towards the information era will probably not occur without its ups and downs. Just as the Industrial Revolution brought about an upheaval in the lives of millions of people, forcing rural workers to relinquish their agrarian habits and adapt to mechanical processes, the information era will shake the foundations of our current economic structures, shattering dearly held beliefs and generating entirely new expectations. The Symposium revealed that workers were concerned about the potential development of a two-tier world in which some could afford access to new technology and its benefits while others could not. It was also pointed out that ways had to be found to prevent social exclusion due to technological development and that the use of electronic means of communications was also part of freedom of association. For their part the Employers' representatives at the Symposium, although fully endorsing freedom of action and dialogue between the social partners without governmental intervention, stated that ethical problems would arise if workers were to use employers' equipment during working time.(4)

Several trade unions present in the sectors linked to the information society have naturally set up sites on the Internet, which is likely to encourage the emergence of a social Internet in line with the globalization of the economy and facilitate the rapid reaction of trade unions during the preparation of structural operations within or between firms, or in the event of infringements of workers' or employers' rights. FIET has recently developed an on-line service for its European partners on the Internet which will subsequently be made available to other unions.

The British trade union CWU believes that all governments should develop information highways because of the links which such highways have with the other public policies and has proposed that a minister or high official should be appointed in the United Kingdom to assume responsibility for the matter.

In the same spirit, this trade union has put forward proposals regarding international competition in the sphere of the new technologies, including the lifting of the prohibition placed on British Telecom and Mercury from providing entertainment services on their communications networks. In exchange for this lifting, British Telecom could provide free of charge a broad band network to schools, hospitals, universities and libraries. The CWU also suggests that the Post Office play a role in promoting access to the information highways.

According to the same trade union, new forms of work (self employment, telework, multi-wage earning) are accompanying the advent of the information society and thus permanent training should be emphasized by both public authorities and operators with a view to ensuring the necessary adaptation of workers' skills.

3.3  The new forms of consultation,
participation and collective bargaining

In the communications sector, labour relations as a whole have deteriorated in the 1990s as a result of the structural and regulatory changes brought about by liberalization, privatization and globalization. Employees and their trade unions, accustomed to the stability of the public sector monopoly or of a private sector in which competition was distorted by the regional division of markets and entry barriers, have reacted rather negatively to the reorganizations and job suppressions described above.

3.3.1  New trends in collective bargaining

The structural, regulatory and social changes under way often result in new collective bargaining techniques or new subjects for negotiation, such as wages when previously fixed by the public authorities.

In general, there would seem to be a threefold displacement under way in many countries and among the different operators:

However, in contradiction to these movements of fragmentation and flexibilization, the appearance of several operators on the liberalized markets is likely to result in concentrations in the new entrants and the coexistence on the markets of several operators of a respectable size which may attach themselves to new or old branches.

As the general report to the Second Session of the Joint Committee for Postal and Telecommunications Services pointed out in 1991, there has been a substantial extension of collective bargaining and of the right to strike in the postal and telecommunications services in the 1990s. The main factor underlying this development has been the privatization of services or the conversion of civil service departments into public enterprises. The report nevertheless stresses that "this is not to suggest that such changes always have a positive effect on workers' rights; in some cases privatization in particular has had quite the opposite effect ... For services which continue to remain in the public sector, collective bargaining is now, in a clear majority of cases, separate from that for civil servants or other public employees ... a number of countries have opted to have more than one level of collective bargaining, thereby preserving a basic remuneration and benefit structure for the public service as a whole, while giving greater flexibility to its component parts to negotiate additional elements outside the core agreement".(5)

In the light of the remarks made earlier, there is reason to believe that these trends became more marked in the 1990s because of the extension of privatizations, the decline of the rules of the civil service, and the smaller role accorded to collective bargaining and trade unions by some new operators. On the one hand, structural and regulatory changes have often provided, for workers in the communications services, an opportunity to gain access for the first time to new rights, including the right to collective bargaining. But on the other hand, the absence of social habits or bargaining practices, the concern of the new operators or the subsidiaries of traditional operators for flexibility, as well as the preference of many employers for individual contracts, restrict the scope of collective bargaining, irrespective of the subjects covered.

Furthermore, the globalization and fierceness of international competition in the communications services may constitute an easy pretext for employers to suppress rights or social benefits, or to try to avoid "wasting time" during social negotiations. This is an important and paradoxical challenge for trade unions -- recently illustrated beyond the communications sector in the Republic of Korea -- since the process of the liberalization of trade in services is a source of increasing overall wealth in many countries, and hence likely to increase the standard of living and economic democracy.

The often radical reforms undertaken in the past in the United Kingdom have been facilitated by the reduction in the influence of the trade unions, an objective which was pursued by Conservative governments from 1979. An ideological context characterized by great confidence in the virtues of liberalism facilitated this policy to dismantle the trade union bastions. Collective bargaining thus became very decentralized in the United Kingdom even though it is not regulated by law.

3.3.1.1 The centralization/decentralization movement
in management and collective bargaining

At the global level the movement towards the decentralization of collective bargaining has continued to become more marked. Telecommunications enterprises in particular have decentralized their structures to enable their establishments to react more quickly to market trends and client needs, and to give greater responsibility to local managers and to reduce the number of hierarchical levels. Labour relations are increasingly organized at the operational management levels of these enterprises. Thus in Telenor, labour relations, previously dealt with by the different regions, now reflect the operational divisions (Telenor Mobiles, TBK, Telenor Plus). The United Kingdom offers an interesting example of decentralized bargaining in the postal sector. The traditional corporate structure of the Post Office had been reorganized by 1986 into three autonomous business units each with responsibility for its own budgetary targets and decentralized collective bargaining arrangements (Royal Mail Letters, Post Office Counters and Parcelforce; see 1.1.2.2 above). After the recent phase of restructuring within the Royal Mail section of the Post Office, which came into effect in 1993, the 63 Royal Mail districts were replaced by nine decentralized geographical divisions with 20,000 employees in each; they are accountable for their own profit and loss accounts, with managerial responsibility being set at the lowest possible level.

Just as companies have decentralized their management, so collective bargaining has become decentralized in turn, with varying degrees of success, since the process may entail additional social or financial costs if it is not coordinated within firms. Recentralizations have thus occurred here and there, in particular regarding the determination of basically unchanging components of remuneration. Thus British Telecom has recentralized part of its management at the level of customer groups and Telstra in Australia has recentralized its labour relations and human resource management.

Technological progress may also be a source of indirect recentralization in so far as a very small technical unit may control a vast range of previously fragmented installations. The centralization of bargaining and management may also prove necessary in the event of cooperative joint ventures or mergers, even if in the case of the latter the social balance of power may result in either social progress in the case of the least advanced operator or in a regression in the case of the most socially developed operator (compare 3.2 above) or to an intermediate situation characterized by the reworking of the status of staff in the new structure. Telecom Italia was thus obliged to centralize its labour relations (including wage negotiations) for reasons of competitiveness and efficiency since the company is the result of a combination of several pre-existing enterprises.

In most OECD countries, trade unions have opposed these attempts at decentralization, which often results in a weakening of their bargaining capacity.

3.3.1.2 The new subjects of collective bargaining

The structural and regulatory reforms under way have enabled emphasis to be placed on new bargaining subjects such as the organization of working time, new classifications, the management of the termination of the civil service status, or the individualization of certain salaries. For their part, trade unions have focused attention on severance pay, vocational retraining and the redeployment of staff. In some cases employers have ceased to recognize certain trade unions, as at British Telecom, and have used consultation as a forum of information on changes under way rather than as a bargaining instrument.

In other cases, the management of change continues to be based on existing bargaining structures. Thus the representative of the Federal Ministry of Labour and Social Affairs of Germany at the ILO Symposium on Multimedia Convergence pointed out: "Although the definition of 'enterprise' might have to be amended in some cases -- in order to include homeworkers or teleworkers, for example -- these and other adjustments can probably be carried out by the social partners in the process of collective bargaining or at the enterprise level. There is already an indication of the first collective agreement between Deutsche Telekom and the German postal workers' union (DPG), which covers these new forms of enterprise."(6)

The Italian strategy for reforming the public sector has confirmed the central role of the trade unions in collective bargaining and in the adoption of innovative and balanced solutions in various spheres of the public sector, sometimes contrary to the wishes of some of their members. Within the framework of the postal reform, the agreement of the three majority trade unions (CGIL, UIL and CISL) has thus strengthened the autonomous trade unions seen as more ready to fight, even if they are in a minority.

The United States operator AT&T recently signed a three-year agreement entitled "Workplace of the Future" with the trade unions which set up a new framework of labour relations enabling the trade unions to participate in the business unit planning councils through which they have been authorized to provide training and information to workers.

Regulatory and structural changes are sometimes accompanied by an updating of social relations within the framework of new collective agreements. Thus in Mexico, the partial privatization of Telmex was preceded by the concertation agreement of 1989, which defined a new culture in which workers would feel bound by the growth of the firm and a fairly flexible occupational relations framework to adapt to the new technologies and the new organization of work.

In Sweden, during the change in the status of the telecommunications operator Televerket, which became Telia AB, changes affecting staff resulted in new collective agreements which apply only to employees recruited after the change in the status of the company (i.e. after 30 June 1993).

In Chile, workers in the postal sector are covered by the same collective agreement as that governing the private sector. Since 1994, the postal service has been encouraged by the authorities to engage in bargaining with the trade unions and in 1996, collective agreements included such matters as wages, including productivity bonuses and training.

3.3.2  The new forms of consultation and participation

The participation of employees in structural and regulatory changes naturally varies in character and intensity according to the countries and sectors considered, as well as the scope of the reforms undertaken and the culture of the social partners.

Realism, the respect of elementary rules of social democracy and the search for consensus are sine qua non conditions of successful liberalization. Depending on the case, consultation and bargaining on the subject of reform may range from comprehensive concertation to vigorous opposition to any form of direct or creeping privatization.

3.3.2.1 Realistic and/or constructive participation

In the United States, labour relations in AT&T, which were based on cooperation, suffered a sharp deterioration when staff reductions were decided. Since 1983, AT&T has continued to reduce the number of its employees, particularly amongst unionized staff (60 per cent between 1984 and 1992). AT&T has also reduced the unionization rate amongst its employees by a reform of classifications: 50 per cent of employees were classified as managerial staff in the middle of the 1990s, compared to 29 per cent in 1980. In overall terms, the unionization rate in the telecommunications sector has fallen by 20 per cent since the mid-1980s. The sharp growth of Sprint and MCI, where trade unions are absent or weak, also explains this phenomenon. Within the regional companies (Regional Bells), the two-thirds proportion of unionized employees remains fairly stable despite liberalization. Deregulation has led AT&T towards the establishment of a collective agreement differs from that of other companies, and the trade unions seem to be opposed to this. The participative measures are intended to gain the support of employees for structural reforms (quality circles, teamwork, quality of working life).

Bell Canada organizes its labour relations through a common interest forum in which management and trade unions examine strategic decisions. The operator and the two main trade unions (CET and CTEA) have also developed staff mobilization programmes.

In Japan, it is usual to consult trade unions before decisions are taken, with an implicit social contract of joint governance often existing between trade unions and employers. The liberalization of telecommunications has led to the almost total elimination of government influence in the collective bargaining process, which is now carried out between independent partners.

The right to strike in Japan is another consequence of the progressive departure of operators from the public sector. The telecommunications companies (first and foremost NTT and KDD) have been able to maintain good labour relations by concluding job security agreements and allowing the trade unions to participate actively in the decision-making process. However, the unionization rate fell during the liberalization phase, as a result of the reduction of staff in these two operators, whose workers are traditionally union members. The NTT management signed a general agreement with the trade unions for the parties to devise a remuneration mechanism corresponding to the quantity and quality of the work and to enrich job content. The agreement also set up a joint consultation mechanism on employment, conditions of work and enterprise management. Former trade union officials will participate in monitoring the smooth running of the enterprise. The enterprise has established a share distribution programme, with employees collectively constituting the second shareholder of NTT after the State (through the Employee Share Ownership Society). Despite massive staff reductions, the social pact thus concluded at NTT has enabled the operator to successfully introduce major reforms.

In Australia, Telstra agreed in 1994 to consider management and trade unions as equal and independent partners and to involve the trade unions in the process of change and strategic decision making. According to the trade unions, however, the social climate has deteriorated in the recent period. Following the entry on to the market of the new entrant Optus (2,600 employees in 1994, and 5,000 forecast by the year 2000), collective bargaining in the telecommunications sector has moved from a sectoral to an enterprise approach. Optus manages its human resources in particular by means of an enterprise flexibility agreement for non-union staff (adopted by a vote of employees), and a works agreement signed with the CEPU trade union. The flexibility agreement covers a number of spheres, including contracts of employment, working time, classifications, remuneration, severance pay, prevention and settlement of disputes.

In Mexico, during the privatization of Telmex, trade unions endeavoured to protect jobs, defend wages and conditions of work, and to negotiate with the Government on the social changes linked to liberalization in the telecommunications sector, within a context of labour market deregulation. Financial participation in enterprise profits or share distribution has been accompanied by elements of economic democracy.

Encouragement has been given to teamwork and the capacity of staff to make proposals. Non-financial participation by employees is ensured in principle by joint management/trade union committees responsible for various subjects (modernization, quality, new technologies, training). During the privatization in 1990, 64 per cent of Telmex employees were members of the STRM trade union (Sindicato de Telefonistas de la República Mexicana) and approximately 18 per cent of other trade unions. In an attempt to forge a new enterprise culture amongst workers and increase productivity, stock options were offered to staff. The Government also encouraged the acquisition of 4.4 per cent of capital by the STRM. Unionized workers bought 3 per cent on an individual basis and the remainder (1.4 per cent) was acquired by the trade union retirement fund. Non-unionized workers were also authorized to buy shares. However, the shares of the main trade union do not seem to have enabled it to sit on the management body of the enterprise.

The new framework of labour relations was established before privatization in the spring of 1989, through a consultation agreement signed between the STRM, Telmex and the Mexican Government which was seen by political observers as a new national model for industrial relations. A general agreement covering all unionized workers replaced the 57 agreements signed at the departmental level. A new more general classification of jobs was introduced and the number of occupational categories substantially reduced. Under the agreement, the management obtained greater flexibility in recruitment and personnel policy. However, the STRM did not seem to have had any choice about signing this consultation agreement, in particular since it appeared to be losing momentum at the time, and the most profitable services had been transferred to subsidiaries employing non-unionized staff. According to some observers, the signing of this agreement mortgaged the union's bargaining capacity.

In the United Kingdom, prior to the privatization of British Telecom and the liberalization of the telecommunications sector, labour relations were based on cooperation with the trade unions. After privatization, shareholders demanded that the operator reduce the "fat" which had built up when the enterprise was part of the public sector. The concerns of market participants and the regulatory body (OFTEL) now seem to be shaping labour relations.

For its part, the management of British Telecom began to transform most of its employees into shareholders of the enterprise and to involve the trade unions in the process of change. The first staff reduction phase (1984-87) shortly after privatization had unfavourable effects on the quality of the service provided by the enterprise. On the other hand, the very significant staff reductions made in the 1990s were achieved without any deterioration in the quality of service, in part, according to the management, thanks to a greater involvement of staff and a wider use of subcontractors and temporary workers. Information campaigns were launched amongst employees and the management tried to involve each in the establishment of the new organization.

In the postal sector, the Communication Workers Union (CWU) published in February 1997 an advisory document proposing a series of reforms for the British postal service, in particular with a view to transforming the Post Office into an independent public enterprise, and which included the establishment of an independent price regulator and greater representation by the trade unions in the management body.

In Belgium, developments in recent years have not significantly damaged the social climate within Belgacom. Each change has been the subject of discussion with the representative trade union organizations and the modification in the status of staff did not lead to any strike. The negotiation process ended with an agreement under which the management undertook to lay off no staff before 1997.

In Sweden, there does not seem to have been any major dispute during the long process of negotiation between Telia and the telecommunications service trade union (SEKO) which represents 60 per cent of employees in the sector. The reorganization of the enterprise reduced the importance of the trade union's representation in the country. The management tried to mobilize staff around the slogan "Vision 2001", since structural and regulatory change is seen as a long ongoing process. The SEKO trade union believes that the staff reductions have been too great in the light of the objectives being sought and the management has accepted a number of demands from the trade unions regarding severance pay, early retirement and training. Furthermore, without wishing to revert to the monopolistic situation which existed prior to the liberalization of the postal service, SEKO argued in favour of a system of charges designed to maintain the basic postal service throughout the country. Trade union criticism also extends to the way in which the competition authorities apply the liberalization measures in the sector.

In Germany, although they are opposed to the privatization movement, the trade unions have not abandoned their tradition of dialogue and campaigned on behalf of reform which respects the principles of social economy and the public service. In response to the Government's plan for privatization of the entire post and telecommunications sector, the German postal workers' union (DPG) put forward its own proposals for an alternative model. Providing for greater flexibility within public structures, it was only partly taken into account. In view of the consequences of privatization within the framework of Postreform II, the German postal workers' union demanded guarantees with respect to remuneration, the maintenance of the structures and influence of workers' representation in the enterprise and the social services and benefits specific to the postal sector. But it was only after one of the biggest strikes in the history of the German postal service (see below, 3.3.2.2) that collective agreements to this effect could be concluded. In the postal services sector, the union had demanded, amongst other things, minimum social requirements as a condition for issuing a licence for mail delivery within the framework of Postreform III.

Deutsche Telekom continues to use co-determination and has introduced a programme for the distribution of shares amongst employees to establish another level of partnership. A special committee has been set up comprising three members of Deutsche Telekom, two from the trade union and a representative of the Central Works Council. Privatization has substantially modified the role of the social partners by:

In the Netherlands, when the Government decided to partially privatize the PTT from 1989, the main trade union Abva Kabo expressed vigorous opposition, fearing in particular job losses (estimated at 4,000 up to 1992), the end of the civil service status of employees and a deterioration in conditions of work. The trade unions believed that the questions of the adaptation of a public service should be resolved within the existing public structure. However, on the basis of studies carried out by a consultant, Abva Kabo finally endorsed the privatization decision and preferred to help shape the process rather than be excluded from it.

Within Telecom Italia, occupational relations have benefited from a favourable climate, with the trade unions playing a decisive role in collective bargaining, both at the central or national levels (in particular as regards wages) and at the regional or decentralized levels (regarding organization or working time, for example). The participatory approach is based on four bilateral committees dealing respectively with training, equal opportunity, quality, health and safety. This participatory approach also extends to human resource management. The company has developed various on-the-job training techniques in application of a collective agreement concluded at the central level. Job stability for existing staff is fairly secure, and is a counterpart to the constructive approach by the trade unions.

As regards participation, mention should also be made of the European consultation mechanisms. Thus the employer/trade union Joint Committee on Telecommunications set up by the European Commission issues opinions in the communications sphere. One of the five working parties is responsible for monitoring the activities of the European Works Councils in the sector. In its opinion concerning the Commission's statement on development of the social dialogue at Community-wide level (1996), the Joint Committee suggested that its composition should be broadened to strengthen the representation of the private sector and it encouraged the conclusion of framework agreements at Community level on a voluntary basis.

3.3.2.2 Liberalization as a source of social tension

In most countries, the announcement of the opening up of the capital of an operator and/or liberalization lead to negative reactions by the trade unions. The World Labour Report 1997-98 emphasizes that

It should be noted in this context that the right to strike is often subject to restrictions in the communications sector. Thus the Committee on Freedom of Association of the Governing Body of the ILO has considered that the right to strike may be restricted, and even prohibited, in the "essential services", i.e. services whose interruption would endanger the life, personal safety or health of the whole or part of the population. According to the Committee, telephone services are part of this category of essential services, in the same way as, for example, hospitals, water supply services or air traffic control. In such cases, however, workers who are thus deprived of an essential means of defending their socio-economic and occupational interests should be afforded compensatory guarantees.(8)

The following examples, compiled on the basis of available data, refer only to situations occurring in the communications sector. It should be noted that often, in the same country, liberalization may give rise to successful participatory developments followed by periods of relatively sharp dispute.

In India, when the Government announced the new national telecommunications policy in 1994, the transformation into a commercial enterprise of the public telecommunications services (DOT) was rejected by the trade unions (representing 450,000 workers) which alleged that it would result in the loss of job security and acquired rights in the civil service.

In South Africa, government initiatives to privatize the postal and telecommunications services have met with resistance from the trade unions which have seen these attempts at essentially budgetary operations. In the mid-1990s the Government undertook a liberalization of the sector, in particular through a franchising system. The Congress of Trade Unions of South Africa continues to oppose the restructuring of the sector.

In Ghana, the sale of 30 per cent of Ghana Telecom met with opposition from the trade unions which believed that the conditions governing the sale of capital were not transparent, or consistent with normal practice in the matter, and because workers had not been consulted and did not have a clear idea of their future. Similar reactions to structural reforms were reported by other trade unions, for example in Pakistan.

In Barbados, the modernization of the postal service was included in the reform of the public sector as a pilot project. A series of workshops has been organized for managerial staff of the postal services and an action plan for the reorganization of the post office and its transformation into a financially viable and autonomous body has been drawn up. The trade unions have endorsed some aspects of the reform but they are opposed to the transformation of this body into an enterprise. This opposition, which stems from fears concerning staff reductions, will result in delays in the implementation of the proposed reform.

In Canada, the federal Government recently requested the Post to transfer to the private sector a number of services, which could result in thousands of job losses. The Canadian Union of Postal Workers (CUPW) organized demonstrations throughout the country including the occupation of the offices of members of Parliament. Communications International suggested to the Canadian Government that the distribution services should be extended to improve customer service and to protect employment and the financial equilibrium of the Post. One of the basic questions for trade unions is how to extend the public postal services to new areas opened up by recent technologies, in order to compensate the loss of market shares in traditional sectors and to protect employment. A wage and job security dispute recently affected Canada Post. At stake were work rule changes that according to the CUPW would eliminate thousands of full-time positions. According to the union, about one-third of its members are part-time or temporary workers.

In Australia, the CEPU trade union mobilized its members against the privatization of Telstra and job suppressions (more than 20,000 envisaged between 1997 and 1998, mainly as a result of the subcontracting of a vast range of low added value services). The trade union is fighting to ensure that Telstra can carry out effective projects oriented to user needs and supply quality services at affordable prices for all Australians.

In Japan the planned restructuring of the postal sector has not met with the same consensus as in the telecommunications sector. The interim plan recently proposed by the Council on Administrative Reform to privatize the savings and insurance activities of the postal service and to transform the mail service into a semi-governmental agency has been opposed by many trade unions and politicians. In October 1997 the Zentei and Zenyusei trade unions organized a demonstration against this project. An opinion poll carried out by the postal workers' trade union Zentei showed that 69 per cent of respondents were not bothered by the fact that the postal services were run by the Government, with 97 per cent saying that they trusted the post office.

During the wage negotiations in 1995 in the Republic of Korea, the trade union of Korea Telecom demanded that the Government suppress or disregard its directives concerning wages. The trade union also opposed the Government's plans to open up the telecommunications sector to foreign companies. The dispute resulted in the arrest of several trade union leaders and the replacement of the president of the company.

In Norway, the transformation of the traditional operator Telenor into a commercial enterprise in 1994 resulted in opposition from two major trade unions, which believed that a number of social commitments were being threatened. Strikes were organized against partial privatization, which at all events was carried out. Growing job insecurity largely contributed to the deterioration in the social climate. Although the unionization rate remains very high, the role of trade unions has fallen since the transformation of the operator into a commercial enterprise, both as regards participation in the establishment of strategic guidelines and the determination of wages and other conditions of work.

In Germany, the acceptance of the substance of the postal reforms by the trade unions has provoked resistance by their members. The DPG trade union has focused its attention on the consequences of the reforms for employees, including longer opening hours and the transfer of some offices to places with a busier passing trade. As noted earlier this reform resulted in June 1994 in one of the biggest strikes in the history of the German post office in which 100,000 postal workers participated for 30 days.

Without making any generalization in the matter, particularly as regards other sectors, it can be noted that the resistance to structural and regulatory change has often been more marked in countries of Latin culture than in certain Anglo Saxon or Nordic countries.

For most of the countries of Latin America, privatization runs counter to the history of the telecommunications sector since in the 1960s foreign companies were expropriated and nationalized following intense political struggles. Thus in Argentina, the sale of the traditional operator ENTEL in 1990 was a particularly long and difficult process which civil servants, trade unions and political parties vigorously opposed. Some ENTEL shares were subsequently sold to employees. The trade unions also launched a campaign to prevent the total privatization of the postal service, which resulted in the establishment of a scheme allowing employees to buy 14 per cent of the shares in the new company.

In Portugal, at the beginning of the 1990s, the social climate deteriorated gradually within the traditional telecommunications operator. Negotiations focused primarily on the status of employees and job reductions and on harmonizing the statutory conditions of workers in the different merged entities or redefining posts or careers according to performance criteria.

In Spain, the trade unions also opposed the process of liberalization and the question of the unionization of employees in the new entrants is still a matter of concern.

In France Telecom, a permanent and decentralized dialogue with the trade union organizations has been initiated. An agreement on freedom of association and bargaining and consultation structures concluded in 1993 organizes collective bargaining at the service level (i.e. the regions), and at the national level, where a National Consultation Commission decides on the creation of national joint committees. The Act of July 1996 set up a joint committee comprising representatives of civil servants and contractual workers subject to private and public law with a view to ensuring the collective expression of staff interests.

Despite these reforms, the trade unions have organized a number of strikes against the change of status and have often shown hostility to the opening up of capital which they believed prefigured the ending of the civil service status and the disintegration of the public service. However, the proportion of strikers decreased with each successive strike movement. Only 16 to 20 per cent of employees participated in the strike on 30 September 1997 against privatization called by the CGT, SUD and FNSA trade unions, whereas in 1993, a single day of strike with a participation of 75 per cent was enough to make the Government back down. As already noted in Chapter 2, the trade unions have obtained a commitment from the operator to continue the recruitment of civil servants for a period of five years in addition to the employment of contractual workers. Apart from the opening up of capital, which was several times postponed by the Government until October 1997, an important cause in the deterioration of the social climate concerned the change in the status of the operator, which was transformed into the commercial enterprise in 1997. The establishment of the SUD trade union, as in other public enterprises present on markets undergoing liberalization, reflects this discontent. During the partial privatization of October 1997, 2.3 per cent of the capital was reserved for employees. Out of a total of 165,000 persons, more than half said that they were interested. This is the first time in France that civil servants have had the opportunity of becoming shareholders in their enterprise.

In a number of countries labour disputes have occurred in enterprises other than the traditional operators in the strict sense of the term. Thus the recent labour dispute at UPS mentioned earlier and which has a clear link with the globalization and liberalization of communications services, highlights new sources of worker mobilization and support by public opinion. United States trade unionism has thus been able to demonstrate that despite the drop in membership, it is capable of mobilizing a large number of workers in support of claims backed up by the growth of parcel service markets. The United States Secretary of Labor believed that the contract concluded at the end of this dispute could provide a model for other enterprises.

The UPS market share in the United States in the transportation of parcels is such that the strike was as effective as a means of pressure as if it had been carried out by a major transport or distribution service (12 million parcels a day, with 6 per cent of the United States GNP paralysed by the strike). This was the greatest labour dispute which the country had known in ten years.

Gaps in representation and consultation in the new entrants

The World Labour Report 1997-98 emphasizes that changes in the composition of the labour market by sector of activity and occupation have often reduced the traditional base of trade union membership: "The internationalization of the economy, whether as present fact or future potential, has a clear impact on industrial relations. It certainly seems to contribute, however indirectly, to the weakening of the trade union movement in several countries."(9)

In the postal and telecommunications sector union membership is tending to fall as employment moves towards the less organized occupations of the new communications services. The rate is naturally higher in the case of public operators than in the private operators. The relative decline of trade union representation can also be ascribed, as noted above, to the use of subsidiaries, new classifications, and the subcontracting out of activities by many traditional operators.

One of the characteristics of the structural and regulatory changes is, as noted earlier, the emergence of new enterprises, which are more flexible and less socially visible. Unlike the traditional operators, these new entrants use human resource management methods which match their light structures. It is scarcely surprising, given the absence of historically acquired rights or social benefits, that trade union organizations are often absent from these enterprises. Their small size (only a few have more than 1,000 employees, such as Mercury or Deutsche Bahn Telekom) and personalized personnel management methods leave little room for the traditional forms of staff representation. Various trade unions, in line with the Communications International's resolutions, have made their establishment in the new entrants one of their priorities.

* * *

All these aspects are currently being discussed at both the national and international levels. It is clear that the globalization process has a strong impact on industrial relations and is profoundly reshaping the social landscape in both industrialized and developing countries. The development of a broader information society will, in turn, require institutional and social adaptations, as emphasized during the ILO Symposium on Multimedia Convergence, as regards "the way in which governments, employers and workers and their organizations articulate their policies ... collective bargaining is a major instrument in supporting these changes and coping with the effects. For collective bargaining to play this role, substantive structural modernization of collective agreements is called for."(10)

1.  ILO: World Labour Report 1997-98 (Geneva, 1997), p. 69.

2.  ILO: Report of the Director-General, Twelfth Asian Regional Meeting (Bangkok, 1997), pp. 32-33.

3.  World Labour Report 1997-98, op. cit. p. 37.

4.  ILO: Report on the Symposium on Multimedia Convergence (Geneva, 1997), document GB.270/STM/1, p. 128.

5.  ILO: General report, Joint Committee for Postal and Telecommunications Services, Second Session (Geneva, 1991), pp. 55-56.

6.  ILO: Report of the Symposium on Multimedia Convergence, op. cit., p. 25.

7.  World Labour Report 1997-98, op. cit., p. 136.

8.  ILO: Freedom of Association. Digest of decisions and principles of the Freedom of Association Committee of the Governing Body of the ILO (Geneva, fourth (revised) edition, 1996), paras. 540-545.

9.  ibid., p. 221.

10.  ILO: Report of the Symposium on Multimedia Convergence, op. cit., p. 116.

4.  Remuneration and other conditions of work

4.1  Introduction

The structural and technological changes as well as the globalization process which are leading towards the information society have to some extent also influenced working conditions in the postal and telecommunications sector.

As noted in Chapter 2, postal and telecommunications operators make use of a large number of more specialized skills as well as new remuneration mechanisms. And it is in the sphere of remuneration that the impact of structural and regulatory changes can be seen most clearly. The operators which initiated the liberalization process were naturally among the first to experiment with new systems of human resource management.

In the telecommunications sector, changes are taking place in the methods of collective bargaining on remuneration issues: the conditions of remuneration of employees are being negotiated within the subsidiaries themselves, classifications are being made on a decentralized basis and wages are increasingly linked to performance. Seniority-based promotion is gradually being discontinued for managerial staff.

These methods are progressively being extended in a number of countries among the traditional telecommunications operators, and some can be found in differing degrees in the postal services.

A trend is emerging -- which is not restricted to the postal and telecommunications operators -- towards a greater individualization of remunerations, in particular for managers, as well as towards a link between performance and remuneration.

As noted in the General report to the Second Session of the Joint Committee for Postal and Telecommunication Services in 1991, "many postal and telecommunications services are concerned about motivating their supervisory and managerial staff through more individualized pay arrangements ... performance-related pay is not incompatible with collective bargaining and ... by obtaining safeguards designed to ensure equitable treatment of staff, trade unions can in fact contribute greatly to the success of such schemes."(1) Furthermore, "pensions have been an important subject for negotiation in the course of the structural changes (...) particularly when posts or telecommunications have ceased to form part of the civil service."(2)

These remarks are also applicable to the late 1990s when several of these trends have become more marked.

4.2  Remuneration

4.2.1  Telecommunications

Remuneration policy is increasingly linked to performance for managerial functions, and more generally to customer satisfaction criteria within the framework of the strategic reorientation of the enterprise towards the client. British Telecom has modified its structure and level of remuneration in order to offer terms which are competitive with those of its competitors. In 1983, the operator introduced a bonus system for high level managers, representing up to 10 per cent of their annual salary. This individualization of salaries remains, however, low when compared with the system of the new entrant Mercury where all salaries are individualized. Furthermore, the provisions of the Health and Safety at Work Act are applicable to all British operators.

In Canada, during the process for the liberalization of telecommunications, pressure has been brought to bear on various operators to moderate the progression of wages, although there has been no backward movement. The drop in labour costs has above all resulted from the subcontracting of activities and the separation of collective bargaining between employers and employees covered by the main agreement on the one hand, and between employers and non-core employees not covered by the agreement on the other. There is a tendency towards the flexibilization of work schedules and remuneration, with increasing use of part-time work, distance work and recourse to self-employed workers.

The traditional telecommunications operator in Belgium, Belgacom, is making increasing use of contractual workers, enabling it to progressively adapt its wage policy to the level of responsibility, in particular for managers. Supervisory functions are thus better remunerated, making the company more attractive vis-à-vis private operators. The range of salaries is, furthermore, increasing to the point that managerial salaries have, as in the United Kingdom, even been the subject of press campaigns. A system of bonuses has been introduced which is likely to be developed in the coming years. A review of the profit-sharing mechanism is planned: whereas today core employees benefit from profit-sharing, in future all staff will be able to do so. There is a plan to distribute 5 per cent of the enterprise capital, in the form of stock options, to manual workers, employees and managers.

In the post and telecommunications services of the Netherlands, remuneration has now been disconnected from the civil service system, seniority-related increases suppressed and a direct link established between wage progression and performance evaluation. The flexibility of remuneration scales is provided by steps through which an employee may progress on the basis of a half-yearly assessment. Wages may exceed the last step by the granting of a special premium and bonuses may be granted for specific posts such as those of sales staff, accountants or heads of sales. When, after the 1989 privatization post and telecommunications employees lost their civil service status, they experienced a drop in their net salaries of around 10 per cent since, as civil servants, they had contributed very little to social security. An equivalent compensation was subsequently paid to them. Privatization has also been accompanied by a concern by management to adjust salaries according to labour market criteria, resulting in an increase in remuneration for managerial staff.

Exceptional remuneration levels and social benefits are a common method for managing the reduction of staff, as noted in Chapter 2. Thus in Tele Denmark, several agreements have made provision for bonuses and benefits linked to retirement for workers who voluntarily leave their jobs.

In Deutsche Telekom, the remuneration of half the workforce (those who are civil servants) is still fixed by the public authorities. However, forms of variable remuneration have been introduced, both for civil servants and other employees, accounting for 20 per cent of the basic wage, and which are related to the achievement of individual objectives and turnover. The DPG trade union opposed this project mainly because of the non-transparency of the performance criteria and because the system might impair the spirit of cooperation between employees. Deutsche Telekom also grants special bonuses to employees in difficult working conditions and is preparing to set up a capital participation mechanism for its employees. Employees who have opted for relinquishing their civil service status are offered higher pay. Hierarchical levels have been reduced to a minimum to allow effective coordination between design and execution tasks and to give employees maximum autonomy.

Wage policy in Telecom Italia is still based on three elements: collective bargaining, automatic adjustments and unilateral management policy. The basic wage and sometimes a productivity bonus (approximately four per cent of the average total remuneration) are fixed by collective bargaining. In addition to various kinds of bonuses depending on the situation and responsibilities of employees, there is a system of special allowances for employees assigned to commercial tasks which vary according to the fixed objectives (approximately 24 per cent of the remuneration of this category of staff). Flexibility of working time is a key element in the new human resource management policy and there is an inventive and flexible system of varied working hours. Furthermore, the management and trade unions meet together in a joint committee on health and safety.

In France Telecom, the law provides for the application to civil servants and contractual workers of the provisions of the Labour Code respecting the financial participation of employees and prescriptions concerning shareholding by employees. In the long term, there may even co-exist within the enterprise a mechanism for shareholding, financial participation and profit-sharing. Furthermore, a globalization of bonuses has been introduced and the profit-sharing scheme has is in part been individualized. The objective is to establish an "overall" remuneration system which is more flexible, more transparent and more motivating. Furthermore, whereas most France Telecom employees retain their civil service status, even after the opening up of capital in October 1997, a decree of 6 May 1997 fixes the rules applicable to the operator as regards occupational safety and health and preventive medicine, namely those of the Labour Code, subject to the particular provisions established by this decree. France Telecom is thus expressly excluded from the scope of the text respecting occupational safety and health and preventive medicine in the civil service.

Before 1991, the remuneration of staff in the Norwegian operator Telenor was fixed by reference to the civil service salary scale. From 1991, the Government gave greater freedom to the public operator, which resulted in a system of globally distributed bonuses. The gap between the highest and the lowest salary remains quite small in comparison with the situation in other companies. But performance-related pay has become more common, even though it is not really in keeping with the traditional spirit of broad egalitarianism. The reorientation towards the client has had, as is often the case, repercussions on working time and the organization of work (longer opening hours, greater availability of staff, encouragement of employee versatility). Special attention is given to wellbeing at work and the fight against noise, in particular by the environment committees.

It is accepted that the new commercial orientation has resulted in Telenor and other operators in greater pressure on the workers: 35 per cent of the latter would go to work if they are sick because of concerns about the negative effects of their absence on their employment and conditions of work. Absenteeism due to sickness fell from 5.9 to 5.1 per cent between 1991 and 1993. More recent studies show similar trends within Deutsche Telekom, with employee stress and a greater sense of insecurity being direct consequences of the liberalization of service and labour markets.

In Hungary, wages are relatively high in the traditional telecommunications operator HTC (where in 1996, the average monthly wage was 76,500Ft and that of skilled workers 80,000Ft, whereas the national average wage was around 40,000Ft). Since 1991, wage negotiations have been held regularly with the trade union. The amount of severance pay is fixed by collective bargaining and an additional bonus equal to 3 to 15 months of wages is paid if there is no available employment outside the company or any retraining opportunities. All jobs were classified in 1994 with the assistance of outside job assessment specialists and the management began to take account of wage levels on the local labour market during the decentralization process.

Wages and other conditions of work may vary significantly within the same sector or the same country depending on whether the operators are public or new private entrants. The Australian duopoly Telstra/Optus in the telecommunications sector is a clear example of this. Thus, working time is shorter within Telstra than Optus, but various social benefits (leave, specific kinds of bonuses) which are seen as counterparts to the flexibility of working conditions, are provided in Optus but not at Telstra.

The wages of the employees in Korea Telecom have substantially increased since the privatization of the enterprise in 1982 (on average by 60 per cent in the first year and 25.6 per cent in the second, as compared with an average increase for all sectors taken together of only 11 per cent during those years).

In Japan, before the partial privatization of NTT, remuneration increased regularly throughout a worker's career. The new remuneration mechanism is based more on individual merit and the improvement of employee qualifications. This new system, which combines the increase of seniority-related remuneration and individual merit, was opposed by the Zendentsu trade union before its introduction. It was initially introduced for managers before being extended to other employees. Emphasis is placed on multiple duties. For example, sales staff are required to carry out simple repairs. The competencies and skills of each employee are evaluated initially by the hierarchical superior or a supervisor, who is familiar with the content and nature of each job. This assessment is subsequently reviewed by a manager from an overall perspective, in order to guarantee employees the maximum degree of fairness and objectivity. This assessment of competencies, qualifications and the achievement of objectives in the determination of remuneration has been said to have increased the motivation and morale of workers at NTT.

In the telecommunications operators in the United States, employees are better protected against a reduction (or an increase which is considered too modest) of their remuneration when they are members of a trade union or when the trade union is powerful in their enterprise (this is the case in AT&T as compared, for example, with new entrants). As regards wage differences based on sex, a study carried out in 1995 by AT&T and seven regional companies showed evidence of discriminations against women, since the categories of jobs in which they are over-represented are less well remunerated than those in which a majority of men are employed. This situation, already noted earlier, is certainly not limited to the United States.

4.2.2  The postal sector

In the postal sector there is a trend towards the individualization of remuneration in both small private enterprises and global integrators, as well as in some traditional public operators.

At FedEx (one of the United States global integrators), pay increments are granted on the basis of merit. In general, however, sorters, clerks and pick-up/delivery drivers reach the top of their scales in four to five years. Every six months there are "merit reviews" and wage increases can range from 1.5 to 3.5 per cent depending on the individual's performance. Moreover, workers at the top of the wage scales of their different occupational categories are eligible for an average proficiency bonus of between 3 and 5 per cent of their basic hourly pay. Employees may also receive additional compensation under profit-sharing schemes, operated at the discretion of FedEx.

As noted earlier, the strike of truck drivers at UPS in the summer of 1997 can be seen as a social consequence of globalization in so far as the exacerbation of international competition in the express parcels service is leading employers to seek greater flexibility in conditions of work. The agreement signed between the management and the trade unions at the end of the dispute will result in a 15 per cent increase over five years in the hourly wage of full-time employees and 46 per cent in the case of part-time employees. Employees will furthermore benefit, after 30 years of activity, from a pension of US$3,000, up by 50 per cent. Before the strike the company had wanted to replace the system in force, which is managed by the Teamsters' union as in the case of several other enterprises, with its own plan, which was more generous but covered only UPS employees.

For its part, the United States Postal Service has regained its competitiveness in part thanks to the distribution of bonuses. The public status of the establishment has not prevented it from paying 63,000 managerial staff according to performance achieved. In 1996 the bonus was 26 per cent of the wage in Los Angeles and less than 3 per cent in Billings in Montana. The bonus is calculated according to three criteria: financial, commercial and social. Employees receive only two-thirds of their bonus, with the other third being retained in the enterprise, which can cancel it if performance is not satisfactory. Since the introduction of the system, productivity has increased, as well as the quality and financial results.

In the countries of the European Union, the average annual wage is higher among private global integrators than the public postal operators. In the case of the latter, remuneration systems still reflect the traditions of the civil service, based on grades and increases in remuneration according to a pre-established salary schedule. However, in the European Union, only one public postal operator has not yet introduced any individualized remuneration system.

The modernization of the British Post Office has resulted in the implementation of an original plan: the "gainshares schemes". These are pluriannual programmes in small production units such as sorting centres, under which bonuses are paid proportional to the productivity gains achieved over a reference period. These productivity gains are verified by an independent body, according to a previously negotiated method. At the end of the programme, the bonuses are integrated into the base wage. Bonuses are distributed by unit, which enables a team spirit to be developed within groups which are increasingly autonomous and responsible.

In France, La Poste introduced in 1995 for managerial staff and in 1996 for non-managerial staff a new simplified remuneration policy which comprises a grade-related salary, a "post supplement", which groups together all the bonuses, and a "variable component" linked to the sale of products and postal services. The management is interested in the system introduced by the United States Postal Service described above.

For its part, the Swedish Post has abolished any automatic increase in wages. Employees negotiate their increases each year on an individual basis, with those able to demonstrate their commitment to clients obtaining more rapid increases than would have been possible under the old system. The SEKO trade union has reported difficulties linked to the lack of transparency in the evaluation criteria.

Managerial staff in the Netherlands Post have been set quality and productivity objectives which in part condition the level of their remuneration. The Abva Kabo trade union points out that labour relations have become tense following the introduction of the system and that some managerial staff have tried to exceed the prescribed objectives to the detriment of labour relations.

Similar mechanisms have been set up or are being tested in particular in the Belgian Post and in Luxembourg.

Pension payments present a special problem in the transition from government to independent corporate status. Corporatization requires a negotiation of pension provisions and, as a result, public postal operators have become responsible for pension payments for retired staff without previously having set up pension funds. Government departments, as employers, did not make independent provisions for pension payments for retired staff and in some countries pension payments accruing to past employees are now seen as a major financial liability.

Finally, in the case of private postal operators in the European Union, whether global integrators or small enterprises, the individualization of salaries is more widespread, particularly for managerial staff, than among the European traditional operators. For example, UPS provides individual bonuses, while FedEx offers collective bonuses.

In small, often local, postal enterprises pay depends more on turnover and market share; basic pay for 'permanent' employees is relatively low but supplemented by bonuses and commissions, which vary considerably from enterprise to enterprise.

4.3  The impact of regulatory and structural
changes and globalization on working time

For reasons similar to those mentioned in Chapter 2 concerning employment, the impact of structural and regulatory changes as well as globalization on working time is very difficult to assess or even to identify, since the reorganization of working time takes a number of different forms in the various enterprises and countries. In a service sector such as the post and telecommunications, negotiations on the reorganization and reduction of working time are held at the enterprise or possibly branch level, without the social partners necessarily being aware of the network of structural, regulatory, economic, technical or sociological causes of the multiple mechanisms used (part-time, early retirement, flexible work schedules, temporary work, monthly or yearly calculation methods, time savings accounts, etc.).

In the European postal sector, working time in the private companies is longer than in the public operators. In some cases, the average exceeds the limits fixed by the 1993 European directive on certain aspects of the organization of working time. On the whole, and not surprisingly, employees of the private postal enterprises are also more flexible as regards hours of work, with express mail enterprises using evening or night work to meet their short-term commitments. Agreements on the payment of overtime hours are current practice and similar to those which exist in public postal operators.

Many private postal operators make substantial use of subcontracting or independent staff when they do not find it economically viable to service particular locations directly. On-call contracts are another possibility, with employees typically telephoning in the morning to find out whether work will be available in the afternoon of the same day. Self-employment can offer substantial benefits to employers, as remuneration is generally dependent on the volume of work undertaken, and they no longer have to pay indirect labour costs or pay workers during times of sickness, etc. Savings can also be made with regard to training costs; since although the training is free, self-employed workers are not usually paid for the time they spend training. The shift to such employment practices offers considerable benefits to private postal operators, both in terms of productivity increases and savings in overall labour costs. The benefits are less obvious for the workers who often bear the burden of the cost of fluctuations in demand.

The globalization of the economy implies a considerable development of trans-border and electronic trade, with increasing recourse being made to the global transporters of express mail parcels and mail. Employees must therefore often adapt to rapid delivery times, which is a source of stress. The flexibility of hours without any counterpart does, however, have its limits, as illustrated by the labour dispute in UPS in the summer of 1997. At least 110,000 employees out of the UPS total workforce of 335,000 are part-time, in line with the company's need for staff flexibility, with 80 per cent of employees recruited between 1995 and 1997 hired on a part-time basis and at an hourly rate of pay sometimes lower than that of full-time employees. The agreement finally reached with the Teamsters union provided for the creation of 10,000 full-time jobs through the regrouping of part-time positions, as well as the announcement of 10,000 other jobs.

It is clear that the relative rigidity of conditions of work in the public postal operators is likely to lose them market shares when customers demand very tight delivery times. But the increasing transfer of the postal activities of the traditional operators to subsidiaries is an effective structural response.

In the case of public operators such as the Royal Mail in the United Kingdom, overtime hours are often a traditional remuneration method for employees. The Post Denmark for its part has concluded an agreement on the annualization of working time whereby weekly hours of work vary according to demand, with for example a lengthening of hours of work during the Christmas period.

As a significant example of the impact of structural change on working time, the restructuring of the New Zealand Post has resulted in a modification of hours of work, with employees engaged in sorting operations being the most affected. Before the restructuring of the 1990s, operations were carried out during the day whereas now they are performed at night. A supplementary allowance equal to 37 per cent of the wage is paid for night work. Furthermore, the use of part-time work is increasing, with the "standard" contract of employment being one of five hours of work per day, five days per week. The New Zealand Post is trying to promote the concept of flexi-workers, in line with practice in other sectors of the economy.

Whereas the user of communications services previously had to adapt to rigid opening and closing hours, working time is now increasingly being adapted to customer wishes, as well as the needs of employers and the aspirations of employees. It is without doubt the balance between these three often contradictory demands which determines the organization of working time in the postal and telecommunications operators. The subject of the arrangement of working time has also become an important aspect for collective bargaining during periods of structural adaptation. Thus in Sweden, workers recruited after the transformation of Posten AB in 1994, generally have 25 days of annual leave; agreements may be concluded under which overtime hours can be exchanged for five extra leave days. In the case of Telia, the Swedish traditional telecommunications operator, work schedules have been adapted to meet customer needs. Telia is now open every day of the year for both customer services and installation and repair work. The organization of working time has been decentralized at the team and individual levels. A recent collective agreement provides a higher bonus for hours worked outside what is considered normal working time.

As noted in Chapter 2, the Netherlands Post has the highest rate of part-time employment in Europe. Some of the sorting work is now being performed in the late afternoon and early evening, working hours which tend to be more convenient for women with caring responsibilities. Saturday deliveries tend to attract mainly students. In order to allay the fears of the current workforce in this regard, PTT Post and the unions have concluded an agreement that all changes in part-time employment will be voluntary, and that weekly part-time hours will be high enough to ensure that part-time employees can earn above the tax limits for national insurance purposes.

* * *

As regards the arrangement of working time and working conditions in general, the postal and telecommunications services of the 1990s, although still a "classic" service sector, are increasingly becoming a laboratory for new forms of work organization and working time arrangements, following the development of the information society, multimedia convergence and telework. Discussions today (and tomorrow) on the reduction or arrangement of working time (or time spent on an activity or occupation considered worthy of remuneration) go well beyond the restricted environment of traditional occupational activity. Timesharing between paid and non-paid activity and the frontier between typical and atypical employment or between the workplace and home are increasingly being blurred in the service societies which use advanced communications means.

However, the new forms of work, and telework in particular, do not offer only advantages as regards conditions of work and quality of life in general. Research carried out in Europe and New Zealand shows that incidents have occurred when economic recession has forced parents to combine telework and looking after their children. Workers are often reluctant to become teleworkers when there are other viable options. There are, however, ways of preventing the marginalization of teleworkers, particularly women, such as the use of flexible work schedules under the responsibility of the worker and the holding of periodic meetings with other employees to reduce the sense of isolation, as well as the ever-present possibility of returning to a more traditional form of work.

At all events, negotiation on a yearly, monthly, weekly or daily number of hours of work are beginning to lose their meaning in the case of some services, and this is not the least challenge to the classic structures of collective bargaining. This evolution of the post-industrial societies, which is already well under way although it still seemed utopian only a few years ago, is due to a not negligible extent to the emergence of new postal and telecommunications services, such as mobile telephones, electronic mail, or the transmission of data and images by satellite, all of which have resulted in fundamental changes in the conception of time and work, and hence in attitudes to working time. Similar developments may gradually affect negotiations on overall remuneration (wage, bonuses, financial and social benefits or benefits in kind) to the extent that "work", which is today still its counterpart, could give way to concepts which are better adapted to the realities of human activity in the twenty-first century.(3)

The ongoing structural and technological changes and the globalization process are paving the way towards the information society. Beyond the expected repercussions on conditions of work, and in particular remuneration, working time and work organization, these changes are having far-reaching consequences on societies and the traditional perceptions of work, employment and the definition of the enterprise. This evolution, which is of fundamental importance for the world of work in general, can be monitored only through a genuine social dialogue.

1.  ILO: General report, Joint Committee for Postal and Telecommunications Services, Second Session (Geneva, 1991), p. 56.

2.  ibid., p. 68.

3.  On this debate, see in particular World Employment 1996/97, (ILO, Geneva, 1996), pp. 23-24.

5. The role of the ILO

The involvement of the ILO in postal and telecommunications services goes back to 1977 when for the first time a Joint Meeting on Conditions of Work and Employment in Postal and Telecommunication Services brought together representatives of postal and telecommunications administrations and workers, as well as a few representatives of the private telecommunications sector.

This Meeting adopted a number of far-reaching conclusions concerning the effects of technological changes on conditions of work and employment in postal and telecommunications services which were already at that time at the forefront of concerns of both employers and workers in this sector. Furthermore, the meeting adopted conclusions on the protection of workers, their participation in the introduction of new technologies as well as work organization and training during that process.

Shortly afterwards a Joint Committee for Postal and Telecommunications Services was set up by the Governing Body of the ILO which held two sessions (in 1984 and 1991). This Committee re-emphasized the principles and conclusions of the 1977 Meeting and adopted a number of conclusions concerning methods of wage determination, the working environment and safety and health as well as resolutions concerning freedom of association and the right to collective bargaining in postal and telecommunications services. In these resolutions the Committee called upon member States to ratify and effectively apply to postal and telecommunications workers the following Conventions:

  1. Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87);
  2. Right to Organise and Collective Bargaining Convention, 1949 (No. 98);
  3. Labour Relations (Public Services) Convention, 1978 (No. 151);
  4. Collective Bargaining Convention, 1981 (No. 154) and Recommendation, 1981 (No. 163);
  5. Workers' Representatives Convention, 1971 (No. 135) and Recommendation, 1971 (No. 143).

In the 1990s the process of liberalization and globalization has shed a new light on these international standards. As the Director-General of the ILO pointed out in his Report to the 85th Session of the International Labour Conference in 1997: "All the partners in the multilateral trade system must guarantee certain fundamental rights, without which workers cannot be assured of receiving their fair share of the fruits of economic progress generated by the liberalization of trade. The list of these rights seems no longer open for dispute: freedom of association and collective bargaining; the prohibition of forced labour, including forced labour of children; and non-discrimination (particularly in the form of 'equal remuneration for work of equal value', stated in the Constitution)."(1)

The telecommunications sector is perhaps the most directly affected by regulatory changes and globalization. The profound, and in some cases even dramatic, structural changes which have been taking place at an accelerating pace in the sector in recent years have been a setback of public monopolies and led to the progressive appearance and expansion of new private actors, all of which is increasingly affecting employment and working conditions as well as labour relations in the sector. The ILO Governing Body decided to reflect these changes both in the composition of the present meeting (which is now fully tripartite) and in its mandate (to discuss the human resource dimension of structural and regulatory changes and globalization in postal and telecommunications services and to adopt conclusions which include guidance and proposals for further action).

Governments, social partners and the ILO should, in this respect, give priority attention to two types of difficulties. The first risk concerns the developing countries which depend on foreign investment to establish or extend their communication infrastructure. The universal service in the post and telecommunications sector is less a reality than an objective to be achieved in many of these countries. It may not be possible to establish such a service because of a lack of financial and technical means. While technological progress now makes it possible to construct multimedia networks on a planetary scale without recourse to wire-based infrastructure, the operators of such networks are likely to target the solvent clientele of the developing countries by proposing tariffs which are lower than those practised by the operators of these countries. This can result in a "skimming off" by international operators rather than the development of communications by local operators to the benefit of the population as a whole. The least advanced countries are progressing only slowly along the path towards global economic integration, at a time when every effort should be made to understand what the globalization movement really means. In the communications sphere as in other economic sectors, the construction of the social pillar of globalization management, counterbalancing the trade pillar represented by the WTO and the financial and monetary pillar provided by the IMF and the World Bank, has been late in coming. It has, however, become customary to affirm that there is a need for coordination in the overall human approach to globalization. By its strategic importance as a vector of the globalization of trade, the communications sector will certainly be a litmus test in this respect.

The second difficulty concerns the adjustment of the means available to the ILO within a global economy and in a world which is becoming increasingly dependent on communications networks in the broad sense of the term.

The evolution of the ILO's role in the context of the globalization of trade should encourage the Organization -- without renouncing adaptable standards, codes of conduct or Recommendations -- to promote, through its standard-setting activities as well as its sectoral meetings or seminars on specific topics, the emergence of an international, social and economic democracy. This role is all the more essential since it is difficult for individual States to gain a clear idea of the human resource management policy (enterprise, regional or overall levels) of multinational enterprises, which are becoming increasingly active in the communications sector.

As mentioned above, a number of ILO instruments provide fundamental guarantees for workers and guidance to governments and the social partners in the social management of economic globalization. Further international instruments could be of particular relevance in the present context of liberalization and economic and social globalization.

The Termination of Employment Convention, 1982 (No. 158) and Recommendation, 1982 (No. 166) are particularly applicable in the case of privatization or restructuring (rights to severance pay, retirement and social security, consultation of workers in the event of dismissal for economic, technological or structural reasons). The Part-time Work Convention, 1994 (No. 175) and Recommendation (No. 182) encourage improvements as regards remuneration, local social protection schemes and other forms of social protection for part-time workers. The Home Work Convention, 1996 (No. 177) and its accompanying Recommendation (No. 184) have as their objective the promotion of equality of treatment between homeworkers and other workers. These standards are particularly relevant in the communications sector (especially in the postal service, where there are many female employees) in which part-time work, whether voluntary or not, has developed considerably.

The Tripartite Declaration on the Principles concerning Multinational Enterprises and Social Policy is also a reference text for social partners in the communications sector. The representation of workers in multinational enterprises is a research topic for the ILO in the 1998-99 biennium. Communications enterprises are concerned first and foremost, and this report is to some extent part of this research. Mention must also be made of the interdepartmental action programme on privatization, restructuring and economic democracy, within the framework of which two studies have been carried out by the ILO in the telecommunications sphere.(2)

The ILO's constituents, through the Joint Committee for Postal and Telecommunications Services, adopted a resolution calling for research on multinational enterprises in the postal and telecommunications services. In response to that request a working paper entitled Multinational enterprises in the courier service industry: Aspects of employment and working conditions in selected enterprises was recently published by the ILO. Furthermore in 1997 the ILO organized an Enterprise Forum to gather ideas and suggestions for promoting social progress and economic competitiveness in a globalized economy. It was suggested that the ILO should provide assistance to workers' and employers' organizations in a context of rapid change, in particular as regards developing countries and countries in transition, in which the communications sector is at the forefront of the policies for modernization, transition towards the market economy and the protection of social cohesion. In this new context, the Enterprise Forum highlighted the new role of the social partners and the service-providing role of trade unions vis-à-vis employees and employers vis-à-vis enterprises, the internationalization of employers' and workers' organizations, the delocalization of service production sites and the social management of subcontracting in accordance with ILO guidelines.

As regards globalization proper, the Director-General of the ILO decided in July 1997 to set up a "Task Force on Country Studies on the Social Dimensions of Globalization".

Globalization and the information society involve social risks but also offer opportunities for social progress. Thus the new technologies can lead to the emergence of a genuine "social Internet" which will in fact (and perhaps one day in law) be accessible on a large scale. As this report has pointed out, attempts have already been made to internationalize social movement on the basis of information technologies. In this respect, the communications sector undeniably acts as a social laboratory, in particular as regards employment, the enrichment of the content of human activities and labour relations.

The rapid dissemination of the new communications technologies and knowledge is likely to increase everywhere awareness of international standards and their effective application and to make more effective the supervisory machinery of the ILO. However, this rapid change may mean that certain standards (except fundamental standards) could become obsolete. These matters were already discussed at the last session of the International Labour Conference in June 1997, resulting in the adoption of an instrument for the amendment of article 19 of the Constitution of the ILO, whereby the Conference is given the right to abrogate any Convention that appears to have lost its purpose or which no longer makes a useful contribution to attaining the objectives of the Organization.

At all events, the changes in the communications sector which this report has described and analysed may also have major consequences for the role of the ILO as a whole. The implications of these changes are already being increasingly felt in the social and labour field; they are not only modifying the strategies and role of all the social actors but the concept and content of work, labour relations and human resources development.

Suggested points for discussion

In the light of the foregoing report, the following points are offered as a basis for discussion to enable the Meeting to develop and adopt conclusions on the matters it considers important. The Meeting is free to modify the list as it sees fit.

  1. What role should governments, employers, workers and their organizations play in the definition, adaptation and respect of the universal service in the postal and telecommunications spheres? How could developing countries be assisted in guaranteeing this service?
  2. What effects do structural and regulatory changes in the postal and telecommunications services have on:
    1. employment levels, recruitment methods and the structure of employment?
    2. vocational training and the outlook for promotion prospects?
    3. the role of management staff and higher training specialists?
  1. What are the effects on conditions of employment and work of employees of:
    1. the partial or total privatization of operators?
    2. the transfer of staff to specialized subsidiaries?
    3. the entry of new enterprises into the postal and telecommunications services markets?
    4. the decentralization of collective bargaining (bargaining at the local level or with the direct employer)?
  1. Do productivity remuneration schemes help stimulate staff motivation during periods of structural regulatory adjustment, i.e. during periods of rapid change in operators? What experience has been gained in this sector of the evaluation of systems based on collective performance as compared with systems based on individual performance? What assessment can be made of the distribution or sale at preferential prices of shares to the staff of various operators?
  2. What is the best way to manage the transition in status, pensions and promotion of workers who have a civil service or public employee status and who will either lose that status or retain it on a lasting basis alongside other workers in the same unit employed on contracts governed by private law, for a fixed or indefinite period of time?
  3. How can the needs for job stability and employment flexibility in the communications sector in the present restructuring process be reconciled?
  4. What measures should be taken in this context to offer retraining opportunities to employees whose posts have been suppressed or modified, in particular women and employees at mid-point in their careers or who are excluded from early retirement plans?
  5. What are the obstacles to the forward planning of staff levels, jobs and careers? What should be done to overcome them?
  6. What role should the social partners play in a changing environment of labour relations due to the globalization of the communication services, multimedia convergence, the emergence of the information society and new forms of consultation and trends in collective bargaining?
  7. What action should the ILO take on a priority basis to assist its constituents in successfully adapting to the rapid changes described in this report?

1.  ILO: The ILO, standard setting and globalization, Report of the Director-General to the 85th Session of the International Labour Conference (Geneva, 1997), p. 12.

2.  A. Verma, The impact of deregulation, privatization and restructuring on employment relations in telecommunications studies (1997, mimeo); H. Hudson, Restructuring the telecommunications sector: Employment issues in developing countries (1997, mimeo).

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--: Report of the group on Basic Telecommunications (Geneva, 1997), doc. S/GBT/4.

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