Paris: France took the first step towards reforming its state-owned postal service on Wednesday, a move that unions and opposition parties fear may lead to the popular operator’s privatisation.
France’s cabinet signed off on the proposal at its last meeting before the summer break, saying the change of status to a public limited company was necessary to prepare for the sector’s liberalisation in 2011, under European Union rules.
“In this context, La Poste will need big investments in the next years in order to modernise and develop and guarantee a high quality of service,” economy minister Christine Lagarde and industry minister Christian Estrosi said in a statement.
A heated parliamentary debate over the change, part of President Nicolas Sarkozy’s reform agenda, is expected for the autumn.
The government has promised La Poste will remain 100% publicly owned and that its key functions providing a postal service across the country, six days a week, at steady prices will be guaranteed.
But thousands of postal workers have taken to the streets in protest over the past year, calling the plan a sell-out of an institution that most French want to remain public.
La Poste said last year it was considering opening up its capital to outside investors to raise funds needed to compete with rivals like United Parcel Service and privatised German post office operator Deutsche Post.
Once considered a somewhat tranquil sector, postal services across Europe have faced an overhaul as the market moves towards liberalisation.
Germany has ended Deutsche Post’s monopoly status and tax advantages, while Britain was planning to sell up to a third of state-owned Royal Mail until poor market conditions forced it to put the plan on hold earlier this month.
But to many in France, the state-owned postal system is an example of tax-funded public service at its best, with La Poste carriers in blue and yellow delivering letters and parcels to even the most remote areas.
Any thoughts of privatisation were swept away by the financial crisis that erupted last year.
Under European Union rules, however, the sector has to open up in 2011, and La Poste’s leadership has said it needs € 3 billion ($4.24 billion) to make La Poste more competitive, for example adapting to the Internet and other new forms of communication.
The operator employs about 300,000 people and runs a savings company where most French hold an account. The government says that if it does not modernise, foreign companies will move in an take over once the sector opens to competition.
The opposition Socialist Party has called for a referendum on the future of La Poste, arguing that there has been no debate over the status change and that neither EU rules nor business objectives actually require such a step.