With just days until Canada Post workers could be back on the picket lines, a key report says the Crown corporation is effectively insolvent, and should be allowed to close more rural post offices, open more community mailboxes, and offer weekend parcel delivery with part-time workers.
The report also recommends that door-to-door letter delivery be phased out, with daily delivery maintained for businesses.
Meanwhile, business leaders across the country urged the company and the Canadian Union of Postal Workers to settle their differences and avoid a repeat of last year’s 32-day strike.
Both sides have until 12:01 a.m. May 22 to reach an agreement or face the prospect of a work stoppage through a strike or lockout.
“Canada Post is facing an existential crisis: it is effectively insolvent, or bankrupt. Without thoughtful, measured, staged, but immediate changes, its fiscal situation will continue to deteriorate,” veteran mediator William Kaplan wrote in his report delivered to the government Thursday but made public Friday.
Kaplan also expressed skepticism that the two sides could reach a deal at the bargaining table, and that binding arbitration also likely wouldn’t be helpful, because Canada Post requires changes in its official mandate from the government.
“Given what has occurred to date, it seems unlikely that free collective bargaining will be successful in bridging the divide,” Kaplan wrote.
He delivered the official report from his Industrial Inquiry Commission to the federal government, including Patty Hajdu, minister of jobs and families, and John Zerucelli, secretary of state for labour.
Both sides met with the government Friday to discuss the report.
In a written statement, Hajdu urged the two sides to reach a deal.
“The report highlights the main issues that are holding up getting to an agreement and offers a way forward. It offers thoughtful suggestions on how to continue good-faith negotiations,” Hajdu said. “It’s time for everyone to put aside their differences, focus on shared goals, and ensure a strong postal system now and into the future.”
Canada Post CEO Doug Ettinger praised Kaplan’s “frank” report.
“This report provides Canada Post, CUPW, our employees and all Canadians with a frank and straightforward assessment of the challenges we face,” Ettinger said in a written statement. “It comes at a critical time as our efforts to respond to the changing delivery needs of the country have taken on greater urgency as Canada works to strengthen its economy in response to U.S. threats.”
CUPW didn’t respond to a request for comment, and by press time, hadn’t posted an update on its website.
In December, Kaplan was appointed to run the commission by then-federal labour minister Steven MacKinnon.
At the same time, MacKinnon asked the Canada Industrial Relations Board (CIRB) to declare an impasse in contract talks. The CIRB did just that, and workers were ordered back on the job Dec. 17, temporarily pausing a month-long strike.
Kaplan was given a dual mandate, both to chart a path for Canada Post’s future structure and mandate, and to suggest the foundations of a potential new contract agreement.
In his report, Kaplan noted that all three of Canada Post’s lines of business — letter delivery, flyers and parcels — were under pressure.
“The first is in rapid decline because of electronic substitution; the second because of the shift toward digital marketing; the third, though overall volumes are rapidly increasing, because Canada Post faces fierce competition from the private sector and is losing market share,” Kaplan wrote.
In previous decades, the more profitable segments of Canada Post’s operations effectively subsidized the more costly parts, Kaplan argued.
“Low-cost urban and suburban mail delivery subsidized high-cost delivery to rural, remote and Indigenous communities,” Kaplan wrote. “This model no longer works because the traditional core business — mail delivery — has fundamentally changed: fewer letters must now be delivered to more addresses.”
Carma Williams, a longtime municipal councillor in North Glengarry — a township near Ottawa — wasn’t surprised by the suggestion that rural post offices be sacrificed to help Canada Post weather its financial headwinds.
“That is a typical approach when organizations are finding themselves in financial difficulty and they need to get their financial house in order, and the first place they go to shut either bank branches or post offices … are to rural areas,” Williams said. “They’re more sparsely populated, and (officials) figure they’re not going to get as big a pushback as in more urban areas, and so these rural constituents fall victim to the rural reality on an ongoing basis.”
She supports the effort to expand community mailboxes, while noting that some constituents, especially seniors with mobility challenges, may still struggle with a change from mail being delivered directly. “But there are ways around those things,” Williams said.
“Let’s face it, I think the days of walking to the end of your driveway to pick up your mail — or having it dropped right in your house — you know, that’s pretty old-fashioned stuff as far as I’m concerned. People move around a lot and have the capacity, for the most part, to get to a community mailbox. That way, they’re not delivering to every single household.”
Still, she sees the report’s closure suggestions as a grim omen for rural communities in Canada. “The potential post office closure is a perfect example of how you can kill a community step-by-step-by-step, by cutting it off at the means,” Williams warned. “What’s going to happen is you’re going to have a rural landscape that’s going to be vastly unpopulated, because people will not move to communities that don’t have any services.”
Kaplan’s report also poses a grim outlook for the union, said Stephanie Ross, a labour relations professor at McMaster University.
“The upshot is that the union is being told that they have to accept more flexible work and a smaller workforce — job security on a shrinking island,” said Ross. “It’s not that different from what happened at the LCBO.”
The dispute, added Ross, goes to the very heart of how Canada Post should be treated — as a corporation with a bottom line, or as a public service.
“If we measure things like this according to the metrics of the private market, we’re eventually not going to have these public services,” Ross said.
In parcel delivery, Canada Post’s share of the market has plunged, even as the overall market has grown, Kaplan noted.
“In 2019, Canada Post delivered 62 per cent of Canada’s parcel market; in 2023, that number dropped to 29 per cent, notwithstanding Canada Post efforts to increase capacity and improve service. Private-sector competitors have almost completely taken over the market,” Kaplan said.
