Royal Mail faces striking problems

The decision by the Communication Workers Union to stage another strike at the beleaguered Royal Mail is another twist in an increasingly gloomy tale.

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Last Updated: 31 Aug 2010

After six months of fruitless negotiations, the union is still refusing to accept Royal Mail’s 2.5% pay hike offer, and continues to object to its modernisation plans, which it claims will put 14,000 jobs at risk. It will now lead a walk-out of employees on 5 October – leaving the UK without post for five days (and providing rivals with a great opportunity to muscle in).

Not for the first time, the union seems to be missing the point – and no wonder it’s confused. The Royal Mail is currently neither one thing nor the other – a lumbering public sector organisation used to operating in a nationalised monopoly, suddenly forced to compete in a liberalised market with leaner private sector rivals. The unions still have a lot of clout – but if they block the modernisation process, there is no way Royal Mail will be able to compete.

After all, it is operating in a pretty hostile environment. The mail market is shrinking by 2.5% every year in the UK, as people increasingly rely on email and mobile phones to get their messages from A to B. And as the market opens up, competitors are taking big chunks out of Royal Mail’s market share. The company says that rivals now handle 20% of all postal mail (including 40% of business mail) – largely because they are 40% more efficient, and pay their staff 25% less.

Management has obviously had it up to the eyeballs with the union. ‘It is clear from our discussions that the CWU leadership does not begin to understand the challenges facing Royal Mail and the very serious consequences for the business if we do not push ahead and modernise,’ it said yesterday (needless to say, it is still waiting for the CWU to come up with a viable alternative plan).

Rumours abound that the union is even losing support from within – some reports have suggested that about 19,000 members have quit in the last six months in protest at its inflexible tactics.

But one thing is certain – doing nothing is not an option. Royal Mail needs to change, but this will be almost impossible as long as the union keeps refusing to play ball.

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