A plan to subcontract out the delivery of mail in rural areas is among a set of radical proposals being discussed by management and unions at An Post.

Under the proposals, self- employed postmen would be responsible for making deliveries using their own vans and they would not be on the An Post payroll.

The concept would not apply to major urban centres which are less costly to service.

An Post is anxious to implement major change at the company's "collection and delivery" operation. An Post faces an operating loss of €30 million for this year.

Its chief executive, Mr Donal Curtin, has spoken about the company being on a financial "knife edge".

Unions at the company claim the subcontracting proposal would result in a poorer service in rural areas. An Post currently engages in some subcontracting at its SDS parcels division. In that case parcels are delivered by what are known as "owner drivers".

These are usually former An Post staff who are now self-employed contractors.

The two sides are also discussing other cost-saving measures, including a new automation programme, the rationalisation of some delivery offices and new arrangements to address the company's €17 million overtime bill.

The proposals have emerged from talks at the Labour Relations Commission which are expected to end today. The proposals will then be discussed by unions next week.

The Communication Worker's Union last night expressed concern about the cost-saving proposals.

"We are extremely unhappy with these measures, they will not work and will not be acceptable to An Post customers," said Mr Sean McDonagh, national officer of the Communication Worker's Union.

A spokesman for An Post said it would be inappropriate to comment on proposals being discussed at the Labour Relations Commission.

The collection and delivery of mail is a highly costly and labour-intensive service for An Post and the company says change is essential if losses are to be stemmed. It is seeking 1,450 redundancies in the company overall.

It has offered workers a 5.3 per cent pay rise over a three-year period.

It is understood the company wants guarantees that the overtime regime will change in exchange for the pay rise. Postmen currently get overtime for any tasks undertaken after completing their day's round. Unions say they are prepared to compromise on the overtime issue.