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TNT Post to Freeze Wages and Cut up to 7,000 Jobs

Dutch mail company TNT will seek to freeze wages and cut up to 7,000 jobs to help lower costs by 300 million euros ($400 million) as its remaining monopoly is opened to competition next year.

The dominant Dutch mail company, whose business is already under attack from rivals Sandd and Deutsche Post's Selekt Mail, did not rule out forced redundancies on Tuesday.

Dutch mail unit TNT Post, one of the country's biggest employers with 59,000 people, has steadily lost mail volume to competitors and as a result of the popularity of email, online banking and government initiatives such as electronic tax filing.

"Less post means less work," Harry Koorstra, TNT board member responsible for the mail business, told Dutch news radio BNR, adding the company expected to lose another 30% of Dutch mail volume in coming years.

TNT said in December that it aimed to cut costs in its mail division by 300 million euros by 2015. It did not specify what provisions it will take in implementing the cost savings.

The company is also seeking to compensate for shrinking mail volumes at home by growing abroad and expects to benefit from the liberalization of the European mail market, due by 2009 according to European Commission plans.

TNT still has a monopoly on mail weighing up to 50 grams, representing about half of the overall mail market, which the Dutch government plans to scrap from 2008.

TNT shares fell 0.6% to 34.48 euros.

Labor Costs

"Some 65% of the cost of delivering post consists of labor, and precisely the factor labor is no longer in step with the market," Koorstra said, adding competitors paid 7 euros-to-9 euros an hour while a mailman cost 22 euros-to-24 euros.

"We don't want to mirror the very low pay that competitors pay their workers ... but we do want to get hourly pay more in line with the overall market, and we think that costs for mailmen are 20 to 25% above the overall market."

TNT said it would also seek to change other employment terms, such as making employees pay pension contributions, which currently was not the case.

Without changes to employment terms, some 11,000 employees would have to lose their jobs between 2007 and 2010, TNT said.

The CNV trade union said it recognized that TNT was facing tough competition, but called the plans "much too drastic." A union representative said there could be strikes.

TNT's collective labor agreement runs until September, and the company was aiming for a new agreement with trade unions by then, a company spokesman said.

Due to a large number of part-time workers in mail delivery, the expected 6,500 to 7,000 job cuts are equivalent to about 4,500 full-time jobs, Koorstra said.

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