Post-Monopoly Era

The EU said Germany and four other countries have to fully open up their markets to national and international competition on Jan. 1, 2008, even though the EU's 22 other countries won't be required to do the same until 2011.

This means that starting in 2008, Finland's postal system, for example, can expand into Germany, where the Finnish companies can concentrate on lucrative big-city markets. While facing competition from abroad in the cities, Deutsche Post will also be left to deliver mail to German rural regions -- a costlier and more difficult service to provide. If Deutsche Post wants to deliver mail in Finland, however, it will be obliged to fork over 20 percent of its turnover to the Finnish state.

It is that kind of scenario, what Deutsche Post calls a very uneven playing field, that is causing an uproar at the former mail monopoly. The German mail carrier has a legal obligation to provide universal service, covering routes that are money making as well as those that are not.

Liberalization woes

Even more troublesome are competing mail services within Germany, which pay their mail carriers lower wages than Deutsche Post, that company's CEO Klaus Zumwinkel said as he lashed out at EU rules to liberalize postal services, which he called "a true mess."

The European postal sector was opened to competition a decade ago for the delivery of packages weighing more than 350 grams (12 ounces). In 2003, the measure was extended to items of more than 100 grams and in 2006, to letters weighing more than 50 grams. The latest plan allows competition for letters weighing less than 50 grams.

In July, European lawmakers voted in favor of deregulating the EU market for letter delivery from 2011, two years later than a proposal from the European Commission. Britain, Finland, the Netherlands and Sweden have already opened their postal markets to competition.

Lawmakers see bonus for consumers

The EU has predicted that customers will notice few of the changes. However, lawmakers believe new competitors are likely to try to distinguish themselves from existing state-controlled post offices with lower costs and special services.

Since the partial break up of the German postal monopoly in 1998, Germany's governing post and telecommunications body has granted some 1,000 business licenses for delivering mail. Unlike employees at Deutsche Post, the mail carriers for these start-ups are often part-time or temporary workers, who don't enjoy the job security or compensation rates of Deutsche Post employees.

Deutsche Post pays its mail carriers a basic 10.14 euros ($13.87) per hour, while the competition pays around 5.90 euros in the east and 7 euros per hour in the west of the country.

On top of that, more and more postal services only pay their mail carriers for mail delivered. This means that in periods of low demand, the welfare office steps in to fill the gaps.

Fear of job losses

"It cannot be the case that steady jobs with social benefits are lost because of the pressure from this kind of competition," Zumwinkel said, adding that some 32,000 jobs are endangered at Deutsche Post.

Zumwinkel has said the postal service should be covered by the Temporary Personnel Assignment Act, passed in 1996 to prevent foreign companies from importing labor to Germany at below-market wages. He said a minimum wage should be set for the sector.

Deutsche Post is also seeking a permanent exemption from paying value-added tax. It currently does not pay the tax because of its universal service obligation. On that point, the competition says the exemption gives the former monopolist its own bit of an unfair advantage.

But Zumwinkel insisted that given the disadvantages he says Deutsche Post faces, political action needs to take place soon.

"You can imagine that my employees are at the barricades," Zumwinkel said. "And I'm with them on the front lines ... [the situation] is almost obscene. It can't go on."