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Canada Post and the city of Detroit: pension battleground

Phil Murton

January 24, 2014

What do Canada Post job cuts and the end of home delivery have in common with the city of Detroit’s declaration of bankruptcy? Pensions.
In December 2013, Canada Post announced that it would end home mail delivery to over 5 million households and lay off 6,000 to 8,000 postal workers, supposedly to save money due to a short fall in pension contributions. In a more extreme example, Detroit Michigan declared bankruptcy in July 2013, claiming that its insolvency is due in part to the burden of pension obligations to thousands of workers. Recently a court has ruled that pensions are not excluded from the claim even though they are excluded by Michigan constitution in the case of bankruptcy.
And at first glance you might think they have a point. Canada Post pension is $6.5 billion in deficit, with annual costs raising it closer to $1 billion by 2020. Detroit projects it will be short $3.5 billion in its fund. Pensions cuts have increasingly become a method of attacking workers living standards and their unions. It is another way of blaming workers for economic problems that they did not create.
But why are pensions in trouble?
The business media emphasizes that smaller workforces and the higher costs lead to reduced contribution. They also pit younger workers with no pensions against older ones who have them. Employers and governments want to use the pension issue to fight their political and ideological battles against workers by suggesting that the time of the "gold-plated" pension is over.
But, they don't emphasize what has really created the pension fund problem. One key reason is historically low interest rates and the slow growth of the economy. Central banks have kept interest rates low to "bribe" business to invest. Another reason, as in the case of Detroit, is mismanagement of pension funds and outright corruption.  
Recently, an attorney who represents Detroit's retirement systems said his clients plan to oppose the new agreement because the banks will get a more favorable deal than the city's retirees in the bankruptcy settlement. Here we have the logic of corporate capitalism: the banks first, people second.
Harper’s attack on the public sector
The attack on postal services in Canada is part of a larger plan by the Harper government to reduce public services and layoff public sector workers.
In response, Denis Lemelin, the national president of Canadian Union of Postal Workers (CUPW) said, ‘Enough is enough. We're cutting the public service, we're cutting the health services, we're cut public servants and people are losing their jobs everywhere. Now it's 6,000 to 8,000 jobs in the postal service…We have a call to the public to say, OK, you don' t want to lose your door-to-door delivery, so you have to say something.’
New Democrat MP Olivia Chow said Canada Post should be focused on expanding revenue through offering more services, rather than cutting existing ones.
CUPW has launched a campaign to fight for services and jobs. The fight to defend public services and postal workers jobs is an important one that we all need to be part of.
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