Paris, Thursday, 22 May 2008 – All types of postal items are set under EU impetus to be opened to competition not later than 2011. Consumers – whether businesses or individuals – can legitimately expect lower prices or higher-quality service.
However, a new study from the Institut économique Molinari shows that the potential benefits to consumers and to employment from this liberalisation are threatened by new social legislation such as the institution in December 2007 of a legal minimum wage in Germany’s postal market.
5,760 jobs are already gone in Germany!
The German postal market was to be opened to competition on 1 January 2008. But following imposition of the postal minimum wage, Pin Group (a competitor to Deutsche Post, the former monopoly) eliminated 5,760 jobs – more than half its 11,000 positions. Abandoned by its main shareholder, the company could disappear.
By contributing to a sharp rise in the cost of labour, the new legislation is becoming a real barrier to entry that directly jeopardises the benefits of this opening. With labour costs much higher than they were without the minimum wage, many potential challengers to Deutsche Post cannot compete.
Social legislation similar to the German minimum wage is being considered and could be instituted in other European countries. It is fundamental to understand that this is a hidden form of protectionism favouring the former monopolies and harming competition.
Consumers are being forgotten
When competition is weakened or non-existent, consumers end up losing. Competition creates incentives for all businesses to provide new services offering better quality and lower prices. It thus represents an opportunity for consumers. In the postal market, it would let consumers benefit from lower prices, faster delivery and more frequent collections.
Germany’s postal minimum wage and similar measures that may be instituted elsewhere would be to the detriment of consumers, whether businesses or individuals, the IEM study explains.
The study, titled Threats to liberalisation of the postal sector in Europe, is available at: https://www.institutmolinari.org/pubs/note20081en.pdf
Information and interview requests:
Valentin Petkantchin, PhD
Institut économique Molinari
Cell: +33 6 82 69 17 39