Postal workers ballot for industrial action

7 Aug 03
Royal Mail faces a threat of industrial action from the Communication Workers Union while it tries to fend off plans from regulator Postcomm that it fears will damage its most profitable business.

08 August 2003

Royal Mail faces a threat of industrial action from the Communication Workers Union while it tries to fend off plans from regulator Postcomm that it fears will damage its most profitable business.

The union decided on August 4 to ballot 160,000 postal workers on the company's 14.5% pay offer. Dave Ward, deputy general secretary, said this came with 'more strings than the Philharmonic Orchestra'.

The CWU is seeking 'a substantial increase above inflation' and has a long-term goal of a £300-a-week minimum.

Royal Mail offered a 3% rise in October and 1.5% next April. But the remaining 10% depends on productivity gains.

Royal Mail said the CWU had agreed to the 30,000 job losses it needs to improve productivity, and had negotiated voluntary departure procedures. But Ward said that accepting this reduction 'would be signing the death warrant' for the postal service.

A Royal Mail spokesman said: 'In a company that lost £611m last year, now loses £750,000 a day and has a pensions' black hole, very few people would say that this is not a generous offer.'

Royal Mail Group's huge loss came mainly from Parcelforce and Post Office Counters, while the postal operation managed an £80m operating profit from handling heavy letters and packets, despite a £500m loss on normal letters.

This issue lies at the heart of Royal Mail's battle with Postcomm over how much it can charge courier firms for delivering letters they have collected. The regulator has said this should be only 11.5p, against 28p for a first-class letter.

Royal Mail chief executive Adam Crozier said: 'The big flaw in Postcomm's thinking is that it does not take enough account of the cross-subsidies that are needed to provide a one-price-goes-anywhere service.'

The £500m loss 'underlines how vulnerable the company is to the risk of cream-skimming if courier firms are given a green light by Postcomm to target the profitable parts of the mailbag,' Crozier said.

Relations between Royal Mail and its regulator have long been poor. 'I think it is important to say that we are facing the most uncompromising watchdog ever,' the spokesman said.

PFaug2003

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