The Frontier Centre for Public Policy today released a report which compares Germany’s post office and its recent liberalization experience and Canada Post. The study, Efficient, Competitive and Better Service: Germany’s Post Office Model and Lessons for Canada found the efficiency and competitiveness of Deutsche Post increased substantially after liberalization and privatization.
The report notes that before liberalization, Germany’s postal industry was dominated by a slow-moving, state-owned monopoly—Deutsche Post. The organization of the German postal sector resulted in limited innovation, poor customer service, below average labour productivity and high letter prices.
In its liberalization and privatization, Germany adopted the same post office model successfully initiated in Sweden and the Netherlands; it proved equally successful in Germany. The move to liberalize Deutsche Post began in the late 1990s under a left-of-centre government coalition, and took effect over one decade in stages. It was complete by January 2008.
Findings:
- The first step in 2000 was to list Deutsche Post as a publicly traded company on Germany’s stock market; liberalization of letter delivery also occurred in stages;
- Liberalization has also led to lower prices for customers through increased competition. In other European countries, only business customers enjoyed lower prices. In Germany, large firms now pay up to 30 per cent less in postage than they did in 2003 and consumers have also seen lower prices since liberalization;
- Between 1998 and 2008, the inflation-adjusted price of mail fell by 16.3% in Germany—the steepest decline among all European countries surveyed and one of only eight countries where prices decreased; in comparison, prices rose in 17 European countries in the same period;
- One of the main objections to liberalizing Germany’s postal market was that working
conditions for postal employees would worsen substantially, if their jobs were not cut altogether. However, rather than cutting employees, Deutsche Post has increased its
over staff by over 100,000 workers worldwide (or 20 per cent of its workforce) since the privatization process began—including after accounting for a reduction in government employees;
- Deutsche Post World Net (as it was now called) became internationally active and competitive) and many of these jobs were created internationally as part of its global delivery service.
“The liberalization of the postal sector in Germany and the privatization of Deutsche Post have translated into significant benefits for business and private customers in Germany, both in terms of price and service quality” writes study author Adrian Vannahme.
“The feared negative effects to universal service and working conditions have been averted and the privatization of Deutsche Post allowed the German government to sell off a struggling state-owned company and reduce public debt.
Recommendations:
- Privatize Canada Post, i.e., make it a company that is traded 100 per cent on the TSX. This can be done incrementally;
- Completely liberalize the postal sector by allowing competitors to enter the market for all letter segments;
- Put in place a regulator that will guarantee the universal-service provision at prices similar to customers located in business hubs
The Frontier Centre’s policy paper, Efficient, Competitive and Better Service: Germany’s Post Office Model and Lessons for Canada, can be downloaded here: archive.fcpp.org/posts/efficient-competitive-and-better-service-germanys-post-office-model-and-lessons-for-canada
For more information and to arrange an interview with the study’s author, contact:Adrian Vannahme
204-803-1904 (C)
