WASHINGTON (AP) _ The Postal Service announced sharp spending cuts Tuesday, an effort to reduce looming losses.

Despite an increase in stamp prices in January, the declining economic conditions and a slowdown in mail growth have the post office facing potential losses of $2 billion to $3 billion in the fiscal year ending Sept. 30, agency officials estimate.

The Postal Service already announced a freeze in construction spending this month.

On Tuesday the agency said that it plans to cut over the next five years 75,000 work-years in labor costs, reduce administrative costs by 25 percent and cut transportation costs by 10 percent. A work-year is the work of one person for one year. The post office employs about 798,000 people.

The cuts were announced by Deputy Postmaster General John Nolan during an industry meeting in Orlando, Fla.

He said the agency is committed to cutting costs by $2.5 billion by 2003.

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