Royal Mail set for Christmas strike chaos

A mass walkout by Royal Mail workers could see letter and parcel deliveries grind to a halt in the run up to Christmas, piling more pressure on the beleaguered postal service.

Around 110,000 members of the Communication Workers Union have been balloted over strike action relating to pay, conditions and employment terms. Results of the ballot are expected on Tuesday, with the CWU proposing to strike at either Christmas or Black Friday at the end of November – two of the busiest periods of the year.

The Times says the planned strike “comes at a crucial time for the 503-year-old former state-owned monopoly. It is battling against slumping letter volumes, the rise of competitors, such as Yodel and Hermes, boardroom upheaval and Labour’s renationalisation threat”.

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Strikes at the privatised postal service were averted last year after Royal Mail agreed to raise pay, reform pensions and reduce weekly working hours from 39 to 35 by 2022, subject to productivity improvements.

A further strike during the busy holiday season “would be yet another headache for Royal Mail” says Bloomberg, whose shares have fallen almost 20% so far this year after a 40% slump in 2018.

However, the CWU has claimed that the deal is “under threat” under recently appointed chief executive Rico Black. Specifically, the union fears Royal Mail is trying to undermine the universal service obligation, which says it must deliver letters six days a week to all UK addresses for a fixed price.

In May, Royal Mail slashed its dividend to free up £1.8 billion in spending on a planned overhaul to help improve service standards, efficiency and productivity, while introducing digitally enabled work tools and financing any acquisitions.

“Standing in the way of all that is the knotty problem of productivity — and getting staff to agree to changes” says John Collingridge in The Times.

Royal Mail’s workforce forms the majority of its costs - 70% of its UK business - but thanks to the universal service obligation, “those costs are notoriously difficult to cut”, he says.–––––––––––––––––––––––––––––––For a round-up of the most important business stories and tips for the week’s best shares - try The Week magazine. Get your first six issues for £6–––––––––––––––––––––––––––––––