Royal Mail needs to modernize – but hardball is not out of the blue | Nils Pratley

sStrictly speaking, Royal Mail management is not saying it is tearing up the nine-year-old deal with the Communication Workers Union, which had helped control labor disputes until the strikes of recent weeks. Instead, as the bosses see things, the bosses exercise the company’s right to end the protections under the agreement in the event of nationwide strikes.

The distinction can be significant if the CWU goes to court. For now, though, it’s the signal that counts. Management’s message is that it is willing to raise the stakes in a dispute over pay and work practices. Challenging the agreement on the ‘agenda for growth’ – or just parts of it – was always a possible next escalation. Now it has happened.

The rhetoric is also up a notch. Royal Mail grumbles about “unique, complex, expensive and highly restrictive union agreements and structures” used to “frustrate” modernisation. Meanwhile, the CWU tells its members it sees a “widespread attack on your union” and the beginning of a plan to turn the company into a “gig economy” employer.

Where is the balance of power? For the postmen, this may be the point where their employer’s parallel proposal to hold interviews with the Acas mediation service should be seriously considered. Two points seem relevant.

First, it would be hard to say that the nation has been severely impacted by the three days of strikes so far. Households tolerate the late arrival of utility bills and the like. Companies that send parcels know that there are other providers. A strike at a privatized Royal Mail will always be less disruptive than, say, one at the railways.

Second, Royal Mail – the British company, unlike the publicly traded group that also includes the profitable international operation GLS out of Amsterdam – is now on track to incur operating losses this year. The whooshing demand that came with the lockdown and propelled the UK company to a profit of £412m last year has turned around. There is a real financial crisis, as the stock price suggests: it fell 5% on Thursday from a two-year low of 205p.

Chairman Keith Williams tosses his luck by bringing up the idea of ​​splitting GLS – it couldn’t happen any time soon and the government would certainly have to approve – but one can follow his math. Most City analysts assign a negative value to the UK postal service. Even without a break, Williams is under pressure from investors to insulate the UK end by making sure GLS doesn’t cross-subsidize unreformed Royal Mail.

None of that to deny that management played hard. A miserable wage offer of a base price of 2% (plus a conditional 3.5%) could almost have been intended to heighten tensions, especially as shareholders received £400m in share buybacks and special dividends last year.

But the fundamental fact remains that Royal Mail must somehow modernize to compete with parcel competitors who are undercutting it in terms of wages and working practices. The natural way out of this dispute still seems to be a deal that couples a decent wage increase with more reforms. A round of make-or-break conversations under the auspices of Acas isn’t the worst idea.

Nonsense from economic forecaster will not end well

Another development in the government’s refusal, detailed here yesterday, to allow the Office for Budget for Responsibility to provide an update on the state of the economy alongside Friday’s mini-budget. Here was the business secretary, Jacob Rees-Mogg, on BBC Two’s Newsnight on Wednesday night:

“When it was founded, I was a big supporter of the OBR. I thought it was potentially a very good body. Unfortunately, none of the predictions were correct and therefore, when people put faith in the predictions, they are more likely to rely on a straw man.”

That is an extraordinary statement for a serving minister to make. The OBR’s forecasting record is not perfect, but it is widely recognized as one of the most transparent and impartial agencies of its kind in the world. When asked if he wants to get rid of the OBR, Rees-Mogg replied, “That’s a matter for the chancellor.”

On this front, we can probably expect more if the OBR finally gets to speak when the real budget comes in later in the year. The rumble of the official body for economic forecasts has begun. The markets will not like it. This won’t end well.

Leave a Comment