Canada Post work stoppage will hurt small businesses, but many people won't even notice

A work stoppage at Canada Post could be "counterproductive" to its efforts to compete as a courier and parcel delivery service, an Ottawa business professor says.

Crown corporation could also lose courier and parcel business, business prof says

A legal work disruption, a strike or lockout, could affect Canada Post deliveries as soon as July 4. (Linda Ward/CBC)

A work stoppage at Canada Post could be "counterproductive" to its efforts to compete as a courier and parcel delivery service, an Ottawa business professor says.

As Canadians become less and less dependent on the postal service for communication, receiving and paying bills, many people may not even notice if mail carriers go on strike or get locked out, said Ian Lee, a professor at Carleton University's Sprott School of Business.

The Canadian Union of Postal Workers (CUPW) has been in contract negotiations since late 2015 with Canada Post, but a contract still hasn't been reached. The union said Wednesday it would not file 72-hour notice of a strike, so the earliest workers could walk off the job is now July 4. That does not preclude Canada Post locking out CUPW before that date.

Canada Post states on its website that it will not operate and no mail will be delivered in the event of a work stoppage.

However, rural post offices would remain open, but won't be accepting new parcels or mail (rural postmasters and their assistants are represented by a different bargaining unit). To learn more about how you might be impacted by a potential Canada Post strike or lockout, click here.

CUPW said in a statement it is preparing a counter-proposal to Canada Post's June 25 offer.

"The vast majority won't notice and won't feel it," said Lee, who has written extensively about Canada Post since the 1980s.

Most people receive many, if not all, of their bills for heating, water, insurance and cable online, and use online banking to pay them, Lee said.

The government used to be Canada Post's biggest client, but about 98 per cent of payments  including tax returns,  pensions and employment insurance are now done through direct deposit, Lee said.

"All that used to go in the mail," he said.

Cheques in the mail

Lee said postal strikes in the '70s, '80s and early '90s could be devastating because so much money was tied up in the mail. In the '70s, he says banks would have to increase lines of credits and make contingencies for businesses.

"Because their cash flow could come to an end temporarily," Lee said. "But those days are gone because now the payment system is digitized."

But many small businesses still rely on the mail, according to the Canadian Federation of Independent Businesses.

Monique Moreau, CFIB's director of national affairs, said 98 per cent of its members still use letter mail, with 39.5 per cent sending more than 50 pieces of mail each week.

A lot of that mail is invoices and cheques, she said, because setting up and making digital payments can be cost prohibitive.

It can cost hundreds of dollars to set up digital payments at each bank, Moreau said, and each transaction can cost upwards of $25, not the $1.50 charged for individual online money transfers.

"That's why they're still relying on cheques," she said.

If cheques aren't coming in to a small business, it could become a cash flow issue, Moreau said.

"Some members have said a work stoppage will put them out of business," she said.

Other options

If mail service isn't available, Moreau said it may push some small businesses to find a way to use digital payments or other services, and then Canada Post loses that revenue.

Lee said a work stoppage won't be good for Canada Post's bottom line.

Letter mail has been declining by five to seven per cent each year, while parcel business has increased by six per cent, he said. But if companies start dealing with another courier such as FedEx, DHL or a local service during a lockout or strike, they may not return to Canada Post.

"Given the post office is trying to transform into a courier, a strike could be counterproductive if they want to survive," Lee said.

"Sometimes, cutting off your nose to spite your face is not a good policy."

Mike Palacek, national president of CUPW, said the union is at the negotiating table seven days a week and hopes to avoid a complete shutdown.

"But there's every indication that they're looking to lock us out in early July," Palacek said.

Pay and pensions

CUPW members have agreed to continue delivering things like pension and social security cheques on a voluntary basis, he said.

Palacek said Canada Post reported a profit of $44 million in the first quarter, and shouldn't be cutting back on employee pensions and salaries.

"Canada Post continues to demand major concessions and cuts from postal workers at a time when the post office is profitable and actually growing its profits," he said.  

One of the big issues is pay equity between rural and urban carriers who do the same work but get paid less, Palacek said, adding that 70 per cent of the rural carriers are women.

Contract issues about pensions don't receive a lot of sympathy from small business owners.

"We know Canada Post is one of the better paid careers and to hear them bickering over pension issues … business owners get a little punchy," Moreau said.

Clarifications

  • An earlier version of this story said Canada Post outlets would not be open in the event of a work stoppage. However, the association that represents rural postmasters and their assistants says rural post offices will remain open, but won't be accepting new parcels or mail.
    Jul 01, 2016 12:42 PM ET

About the Author

Nicole Riva

Nicole Riva is an online reporter and editor for CBC News based in Toronto.