Royal Mail chairman says firm is at ‘crossroads’ as it balances union action with productivity woes

Royal Mail chairman Richard Williams has said unions can’t expect a no-string pay deal “where nothing changes”, as the company tries to balance dwindling productivity alongside rising union tension.

With both Unite union and the Communication Workers Union (CWU) taking aim at Royal Mail, Williams told The Sunday Times that the company has reached a “crossroads moment”.

“I’ve been very clear with investors that this is a difficult, probably the most difficult, union relationship job there is. This is the fourth industrial dispute since privatisation and the managers have not taken action for decades. We’ve run out of road”, he said.

Royal Mail said it offered a 5.5 per cent pay rise to workers, with a further 3.5 per cent dependent on achieving efficiencies.

As it stands, Royal Mail’s wage bill is £5.5bn, and Williams told The Sunday Times that even upping it by 5.5 per cent would result in a “headwind” of about £250m for the company.

“What is it that offsets that headwind? Previous agreements with the union have delivered pay but they’ve not delivered the productivity to offset it, in a market where our revenue has been flat

The problem with where we are is that the unions want a no-strings pay deal where nothing changes. But we need to pay for that pay deal through productivity”, he said.

CWU’s deputy general secretary Terry Pullinger lambasted this offer as “totally inadequate”, and is trying to rally 115,000 workers to prove it.

CWU are expected to post their ballot results on 19 July about whether industrial action will be taken.

In separate action, Unite announced that 2,000 Royal Mail managers would strike on 20 July to 22 July.

“This business is awash with cash but it is putting profits and dividends for the few at the top ahead of its duties as a public service. There is not a single aspect of these cuts which is about improving customer service”, Unite general secretary Sharon Graham said.

“They are being driven entirely by a culture of greed and profiteering which has seized a 500-year-old essential service, driving it close to ruin”.

Unite also claims that Royal Mail actually imposed £7,000 pay reductions in some cases, which the company fervently denies.

Royal Mail said it was “disappointed” by Unite’s action, having been in discussions with the union since November 2021 about the reduction of 700 managerial roles. The publicly listed firm said there were “no grounds for industrial action”, citing the extended consultation on its recent restructure and commitment to protecting pay for all managers who stay with Royal Mail.

Royal Mail posted group-wide operating profit of £758m in May, and raised prices by 10p to 95p first class stamps for customers, as well as imposed hikes across second class and packages.

It comes as regulator Ofcom continues its inquiry into Royal Mail’s failure to meet targets in the past year, missing the first class and second class delivery targets by 12 and three per cent respectively.