Good Morning, Germany!
Donald Trump and Emmanuel Macron are leading much of the global conversations this morning as the American president is considering a u-turn on pausing US military aid to Ukraine, and the French President’s televised speech last night regarding the crisis in Ukraine is being discussed by global publications.
A little closer to home, Germany reports on upcoming healthcare strikes, the public backing for huge investment into infrastructure and defense, ongoing coalition discussions and the latest updates from the attack in Mannheim (police say there were no political motivations).
The German news also dissected Macron’s speech last night, reporting that, following Friedrich Merz’s proposal, France’s president appeared open to a common nuclear deterrent in Europe.
Deutsche Post Announces Job Cuts for 8,000 Employees
Deutsche Post is set to cut 8,000 jobs in Germany by the end of 2025, significantly impacting its operations, particularly in the letter and package sectors. The company stated that it currently employs around 187,000 staff within this division, which will see a reduction of approximately four percent. This decision has been framed as part of a broader austerity programme aimed at mitigating rising costs, with the goal of saving over one billion euros.
Despite a slight increase in overall revenue last year, declining operating results have prompted these cuts. The German operations of Deutsche Post reported sales of around 17.3 billion euros but witnessed a 5.6 percent drop in operating profit, mirroring the challenges faced across the company’s global logistics operations.
DHL Embraces Austerity Amid Economic Uncertainty
DHL, a subsidiary of Deutsche Post, has experienced difficulties in the German market, prompting management to adopt drastic measures. CEO Tobias Meyer indicated that a challenging macroeconomic environment is impacting profitability across DHL’s sectors, including express services, freight, and supply chain management. While package deliveries have seen growth, traditional letter mail volumes continue to decline, raising concerns about long-term viability.
The effect of geopolitical tensions and a volatile economy has weighed heavily on the company’s outlook for 2025. Measures for cost reduction are expected to be expedited, particularly after a recent collective bargaining agreement that intended to increase wages for around 170,000 employees.
Collective Bargaining Leads to Job Cuts
The announcement of job losses follows closely behind a collective bargaining agreement that promised wage increases for Deutsche Post employees. The two-year deal, agreed upon with the Verdi union, entailed a two percent pay rise in the first year and another three percent in the second, along with additional vacation entitlements for long-term employees. However, this new agreement quickly led to discussions of further cost-cutting measures in light of ongoing economic pressures.
Management has emphasised that these job cuts are not linked to the wage increases but rather reflect the pressing need to address operational inefficiencies amid falling profits.
Federal Network Agency Denies Rate Increase
In a move that underscores the company’s struggles, the Federal Network Agency recently rejected Deutsche Post’s proposal for a more substantial price increase for postage services. The company had already raised postal rates by 10.5 percent at the start of the year, but further adjustments are deemed necessary to address rising operational costs.
Despite these efforts, Deutsche Post faces criticism for its perceived inability to adapt to the digital landscape, which has fundamentally altered the mail and package delivery industry.