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Wages and benefits account for 80 percent of Postal Service costs, and work hours will also become more costly due to rising benefits costs. In each of the next 10 years, workers’ compensation costs are projected to rise by 2 to 4 percent, and health insurance premiums by 4.7 to 5.2 percent. While the Postal Service has collaborated with its unions to structure reasonable compensation options, and has been negotiating since September with two of the four largest postal employee unions—the American Postal Workers Union (APWU) and the National Rural Letter Carriers Association (NRLCA)—federal statutes hamper its ability to craft a market-based benefits package.1 A proposed change in the law would require arbitrators to consider postal finances as part of their arbitration deliberations. In the meantime, as more than 300,000 employees become eligible to retire in the coming decade, there is a need to establish a more flexible workforce that is better-positioned to respond to changing customer demands.
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