Thank you.
I would like to thank the members of the committee for inviting us back here. I'm once again accompanied by our chief financial officer, Wayne Cheeseman, and our vice-president of government relations and policy, Susan Margles.
I'll start with a few remarks and then we'll open it up for questions.
Last time we met, you were about to embark on a cross-country journey to talk to Canadians about the future of postal service. Over the last few weeks, you've heard a lot about Canada Post. You have seen the size, the scope, and complexity of our vast network in urban, rural, and remote communities. You have met a number of our employees who work hard to serve Canadians and are proud to do so. You have talked with people who really count on postal service.
As you witnessed, we are important to so many Canadians for many different reasons. For some, the postal service still provides an important connection to their community and to the rest of the country. For others, the postal service is crucial to their business and to the people they employ. You learned that countless charities rely on Canada Post to raise much-needed funds. This is an incredibly important institution, with over 250 years of history. We're not perfect, but Canadians still value the service we provide and the effort it takes to make it happen every day.
You have seen the challenges facing Canada Post up close. You have heard from many Canadians who are counting on us to secure a strong future for their postal service. Therefore, we must get it right. You have been asked to put forward recommendations that will not only shape Canada Post and the services we provide to Canadians, but they must also ensure the institution is on a solid financial footing for generations to come.
As I stated when we first met, the challenges facing the corporation are large. The solutions to them must match the enormity of the challenge. The task force studied the situation and confirmed that the need to transform the business is urgent and indisputable. The amount of mail in Canada has been declining every year for the last decade. Domestic letter mail volumes have declined 32%. Almost a third of our business has evaporated from its peak, and it will continue to do so. While understanding the massive impact that this decline is having on Canada Post is easy, unfortunately there are no easy solutions or silver bullets to fix the postal system. There's also no one-size-fits-all solution that will work in urban, rural, and remote communities.
The good news is that Canadians clearly understand that the postal system needs to change. That's what the task force found in their research as well. Canadians want Canada Post to continue to provide an important public service while remaining financially viable. To do that, we need to increase revenues while reducing our costs. You have heard some ideas to grow revenues over the last few weeks. The task force also looked at an extensive list of potential options before narrowing it down to the suggestions in the report.
I can tell you that at Canada Post we have looked at and will continue to look at any idea that could grow revenue. Finding the best options is not always easy, but we have had the most success when we asked three simple questions: Is it something Canadians want? Is it something we're good at? Will it add new revenue above and beyond any new costs?
One such example would be our strategic decision to leverage the power of our core delivery business to help kick-start e-commerce for Canadians' small, medium, or large businesses. We're definitely good at it. In fact, we deliver two out of every three parcels that Canadians order online. Canadians want more parcels every day. There are eight in 10 Canadians who are now shopping online, and they're doing so more often. As for new revenue, parcel revenue alone has jumped by more than $400 million since 2011. That's almost half a billion dollars in a few short years. It is no small feat for any corporation, let alone a crown corporation, to grow a revenue of half a billion dollars in such a short period of time. We achieved this growth by doing more than delivering parcels. We worked closely with Canadian companies to understand their changing needs and deliver innovative solutions that are relevant to them. When they succeed, we succeed.
Revenue growth is key to securing the future of the postal service. The difficult, but equally necessary, part is reducing our costs. Most Canadians understand that the size of the organization needs to change to reflect the new realities of a digital world, but they don't want to see Canada Post employees laid off or lose their jobs. Neither do we, but we must acknowledge that labour represents 70% of our total costs.
According to Ernst & Young's analysis completed for the task force, our labour costs are 41% higher than those of comparable businesses in the private sector. As we transition from a mail-centric service to a parcel-centric service, that's who we are competing with. At the same time, we have a mature workforce. The average age of our employees is 49. A large percentage of our employees, over 16,000 of them, are eligible to retire in the next five years. That means significant and necessary changes can be made to the postal system without the need for layoffs. That's very important. We can achieve the smaller workforce we need through attrition. Even if we implemented every suggestion put forward by the task force, we'd still be hiring people every year at Canada Post. Canada Post will continue to be one of the country's largest employers for years to come.
This approach is respectful to our employees. It allows them to retire knowing we're making the necessary changes to secure the company they helped to build and will depend on for their retirement. It also respects our collective agreements and the job security provisions for our employees. As you can see, the window to take advantage of attrition at Canada Post is relatively small. The task force highlighted this in their discussion paper, when it said, “Canada Post must realign and streamline operations during this time frame in order to take full advantage of this attrition window”. This adds urgency to work that you're doing to help define the postal service of the future.
I would also point out that reducing the workforce to align with future realities must continue at all levels in the organization. Since 2008, Canada Post's overall workforce has been reduced by more than 15%. While management represents about 5% of our employees, as a group it is 20% smaller today than it was in 2008.
Reducing costs requires change, and change is never easy. Canadians are ready for change, but they expect a healthy level of consultation to ensure we get it right. Finding common ground will be incredibly important as we move forward. We understand the expectations on Canada Post are high, and we are committed to doing a good job.
To see what's possible when we leverage the power of this incredible institution, you just have to look at how Canada Post delivers the holiday season. This is the time of year when Canada Post is at its best. We're already deep into our plans, knowing that the growth in e-commerce means Canadians are counting on us like never before. Parents and grandparents are depending on us to deliver their holiday shopping, and thousands of retail businesses are betting on us to make their holiday season a success.
It's not just about parcels. We will proudly be delivering every Christmas card and helping Santa respond to over a million letters from Canadian children. We will deliver thousands of catalogues, coupons, and promotional samples from all kinds of businesses. We will also help facilitate the transfer of funds at our post offices from new Canadians to their families around the world.
The postal system matters to this country, but it needs to change. If we do this right, it will remain a strong and relevant contributor to the lives and livelihoods of Canadians for years to come.
The work you are doing is incredibly important. On behalf of everyone at Canada Post, I would like to thank you for your efforts.
I will take some questions now.
