UNIONS representing workers at An Post are expected to examine the accounts of the postal company over the next two weeks to investigate management’s claim that it is unable to pay the 3% increase due under the Sustaining Progress agreement.

Under the terms of the national partnership deal negotiated by the government, employers and trade unions, companies that decline to make agreed increases have to demonstrate their inability to pay.

According to union sources, An Post management may have overprovided for future liabilities by as much as €75m in order to exaggerate the financial problems facing the national postal service provider. This allegation has been flatly rejected by sources close to An Post who said unions were fully conversant with the financial position of the company. The 9,000 workers at An Post were due to receive their 3% pay award last November. The payment would cost the company €18m this year and €33m in 2005.

An Post was forecast to make a small profit last year but made a loss of €46.4m. About €36m of this loss was incurred in the letter post division with much of the remainder being accounted for by the SDS parcel division. In recent years An Post has come under increasing pressure from private operators in the parcel delivery sector.

Donal Curtin, a former senior executive at the ESB, took over the running of An Post last year and has since entirely restructured the managerial team.

Management has said that payment of the 3% increase is linked to its demand for 1,350 redundancies and cost-cutting programme, which includes the closure of post offices, designed to ensure the company breaks even by the end of 2005.

The state postal firm, which has also pencilled in plans to sell off much of its property portfolio, has used an overdraft facility for the past six months to meet its payroll costs.

The company is also seeking a price increase from Comreg, the regulator that oversees the postal sector. However, Comreg has said it will only contemplate an increase in the price of stamps if An Post succeeds in tackling its internal costs.