Royal Mail hit by first national strikes in a decade

In June and July 2007, postal workers at Royal Mail held two 24-hour strikes in protest against pay and company modernisation plans. The protests are the first national postal strikes to be held since 1996. However, Royal Mail insists that the opening up of the postal services sector to full competition since January 2006 has increased competition and the need for modernisation of the company.

On 29 June 2007, up to 130,000 postal workers at Royal Mail took part in a nationwide one-day strike. The representative trade union, the Communication Workers’ Union (CWU), warned that the strike would be the first in ‘a continued series of postal strikes’, unless Royal Mail engaged in ‘fresh and meaningful talks’. The strike affected mail distribution services, the supply chain including cash handling and some 458 ‘Crown’ post offices employing Royal Mail staff. A second 24-hour strike took place on 12 July.

Trade union objectives

The dispute was triggered by CWU’s rejection of a 2.5% pay offer, inclusive of productivity bonuses, and its demand for a national agreement on automation and restructuring. The trade union put forward its demand for ‘a decent pay rise and an agreed approach to automation and major change’. CWU wants a basic pay rise in line with inflation and the pay of postal workers to be increased to the national average within five years. However, Royal Mail has rejected these demands, equating them to a 27% rise at a time when competition is placing increased pressure on costs. CWU has meanwhile expressed its concerns that modernisation plans could lead to as many as 40,000 job losses.

The CWU Deputy General Secretary, Dave Ward, insisted that the union was not opposed to change but that it should be managed nationally and by agreement. Mr Ward explained that ‘a key factor in our negotiations has been our insistence that Royal Mail back off from introducing panic-driven cost-cutting measures at local level’.

Company position

The company argues that:

The strike is simply ignoring the reality facing everyone at Royal Mail – that we are no longer a monopoly and that rivals this year will be handling one letter in every five posted. The dispute is about the whole future of Royal Mail and the absolutely urgent need to modernise, as our rivals have already done.

Royal Mail has been exposed to full competition since January 2006, ending a 350-year monopoly (see also the UK national contribution to the EIRO comparative study on Industrial relations in the postal sector). The company claims that its competitors pay their staff 25% less and are 40% more efficient because they use new technology and modern work practices. Royal Mail also argues that it has lost 40% of its bulk business mail to rival operators. In June 2007, the company announced that the online retailer Amazon had decided to move its GBP 8 million (about €11.8 million as at 6 August 2007) contract from Royal Mail.

The Chief Executive of Royal Mail, Adam Crozier, explained: ‘We are losing business because we have failed to change and modernise… If we don’t modernise, then the future for everyone in the company will start to look bleak.’

Reaction of business community

Business representatives expressed their disappointment that the strike had gone ahead and called on the government to intervene. The Federation of Small Businesses (FSB) remarked that ‘the two sides need to see the bigger picture and resolve their differences. The livelihoods and jobs of many people in small businesses will be put at risk if this dispute continues for much longer’.

Commentary

Royal Mail has steadily lost its business customers since the postal service was fully opened to competition in 2006. In January 2007, the Department for Work and Pensions became the first government department to switch to a private-sector service provider. In addition, the Crown post office network, which includes the largest branches, is said to be losing about GBP 70 million (around €103 million) a year. The company thus deems ‘modernisation’ an urgent priority. As a result, CWU is even more anxious to reach agreement on the nature of restructuring and its impact on jobs and pay. Postal workers’ basis pay levels are low, and earnings are frequently boosted by high levels of overtime.

The settlement of the 2006 pay round led to a new commitment by Royal Mail and CWU to work together, including on the negotiation of new work practices. CWU described the deal as a ‘defining moment in the relationship between the company and the union’. It committed the parties ‘to work together to ensure that we become the most efficient, customer-focused and flexible company in the marketplace, and at the same time raise the value and status of postal workers’. Unfortunately, the complexities of reaching agreement on multiple issues – such as work organisation, technology, pay, working time and redundancy – means that this goal may now seem overly optimistic, particularly given the company’s tight timetable for change.

James Arrowsmith, IRRU, University of Warwick

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