Post unions must deliver a solution

[TrueBlueTerrier]

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Privatisation may be defeated, but that won't solve Royal Mail's many problems, writes Tim Webb



Royal Mail is braced for further industrial unrest, with unions expected to ballot more regions for strike action as early as this week. It follows the vote last week by postal workers in London to stage a 24-hour walkout this Friday.

With plans to privatise the state-owned group in disarray, Jonathan DeCarteret, from the consultancy Post-Switch, is predicting that the London vote will prove to be the "starting pistol in a long summer of industrial strike action".

Both sides blame each other. The Communications Workers Union, which represents most of Royal Mail's 150,000-strong workforce, says the company is making "arbitrary cuts" without its agreement. Royal Mail, in turn, argues that the union keeps resisting changes under its modernisation programme.

Industrial disputes at Royal Mail are nothing new. In the autumn of 2007, the CWU organised a series of national strikes in protest over changes in pay and working conditions. But this latest round of action comes at a critical time for Royal Mail. The government has drawn up a controversial plan to part-privatise the group by selling a minority stake to a private sector competitor. Indeed, for ministers, one of the big attractions about the sell-off is that it would make the difficult industrial relations someone else's problem. The idea was that a private sector operator would be immune to the kind of political pressure being brought to bear on the government and would be more able to push through radical changes - and huge job cuts.

Now the plan looks likely to be ditched under political pressure. But even if ministers back down, they will have to come up with an alternative plan to turn Royal Mail into a viable business. While it made an operating profit of £321m last year, its estimated £10bn pension deficit means it is technically bust.

The company is desperately inefficient compared to its rivals. For example, its postmen and women spend about two hours a day sorting their letters - by hand - into the right order for delivery. Privatised European companies - themselves mostly former state-owned monopolies - use sequencing machines to automatically order most of their mail.

The government, which has promised to plug the pension deficit, will demand big changes in return for doing so, even if it stops short of privatisation. The question now - for the union and Royal Mail - is whether they can bury the hatchet and agree a cost-cutting modernisation plan as a viable alternative to privatisation. If they can't, it is likely that a restructuring plan will be forced on them instead, which could be more painful.

Judging by the events of last week, the chances of a genuine rapprochement do not look good. At the CWU's annual conference early last week, the union passed a motion offering Royal Mail's management, led by the former Football Association boss Adam Crozier, a three-month "moratorium" on industrial action. In return, the union demanded a temporary halt to the modernisation programme to allow for more talks. Following the news on Friday of the London strike, one Whitehall source observed: "That was the shortest moratorium in history."

Royal Mail has made some strides to cut costs and modernise, and it would not be true to say that all efforts were being blocked by the CWU. The government has loaned the company £1.2bn to buy sorting machines and other equipment. Half the money has been spent, and the union says it is keen for all the money to be invested quickly.

As mail volumes decline, Royal Mail has already cut about 40,000 jobs in recent years, by not replacing people leaving the business or offering generous voluntary redundancy packages. It has promised the union not to make any compulsory redundancies. But one industrial relations expert claims that behind union resistance to modernisation is a fear that as the company becomes more efficient, it will run out of people prepared to take voluntary redundancy, and compulsory job losses will result. "The gulf between Royal Mail management and the CWU is pretty wide," he says. "It's very hard to see them being able to find a compromise."

The CWU has run a highly effective campaign against the privatisation plan. But if, as expected, the plan is thrown out, it could turn out to be a pyrrhic victory for the union. If industrial relations continue to deteriorate, it will only strengthen the argument of business secretary Lord Mandelson that some other type of harsh medicine is needed to cure Royal Mail.

[DGP1]

I think the main thing that RM need to do is stop putting the cart before the horse, they really need to put the machines in before they cut the staff, not cut the staff and then put the machines in.

[janitor]

I think the main thing that RM need to do is stop putting the cart before the horse, they really need to put the machines in before they cut the staff, not cut the staff and then put the machines in.

Good point, they closed our night shift because in a few months time the walk sequencing machines will make them obsolete we fell for that one, three years later and still no sign of the walk sequencing machines, we need to cut the amount of full timers and put some people on walk preping for part timers, we haven't fell for this one, still no sign of the walk sequencing machines although just like three years ago there installation is imminent. We've told them once the sequencing machines are in and running flawlessly we will discuss indoor working changes till then no.

[shelanda]

I think the main thing that RM need to do is stop putting the cart before the horse, they really need to put the machines in before they cut the staff, not cut the staff and then put the machines in.

but that is a sensible way of working!! RM are run by people incapable of sense in any form!!!