Postal workers latest to strike as UK cost chaos continues

LONDON — Postal workers across the U.K. went on strike on Friday in a dispute over pay and conditions at the former state monopoly Royal Mail, the biggest strike of the summer and the country’s largest since 2009.

The walkout, the first of four planned in the coming weeks, involved 115,000 workers across 1,500 locations, and is the latest in a slew of industrial disputes unfolding as the country battles a historic cost-of-living crisis.

This week, criminal barristers voted to strike indefinitely from Sept. 5 — the day the country’s new prime minister is announced — over cuts to their pay arising from government changes to the country’s legal aid system.

Meanwhile, mass rail strikes have brought the country to a halt on multiple days throughout the summer.

Members of the Communication Workers’ Union (CWU) voted by a resounding 98.7% in favor of the strike action, on a turnout of more than 72%. Further strikes will take place on Aug. 31, Sept. 8 and 9.

Royal Mail says it has offered CWU members a 5.5% pay rise, and has cited the company’s precarious financial situation as a key reason why pay cannot keep pace with inflation.

The group has reiterated that Royal Mail is already losing £1 million ($1.18 million) a day and CWU’s demands would cost over £1 billion a year to implement.

In a statement Thursday, Royal Mail said the strikes had plunged the company into “the most uncertain time of its 500-year history.”

“Our future is as a parcels business. We must adapt old ways of working designed for letters to a world increasingly dominated by parcels, and we must act fast,” the company said.

“We want to protect well-paid, permanent jobs long-term and retain our place as the industry leader on pay, terms and conditions. That is in the best interests of Royal Mail and all its employees.”

Royal Mail accused the union’s proposals of being resistant to change and said the CWU’s vision for the company’s future “would create a vicious spiral of falling volumes, higher prices, bigger losses, and fewer jobs.”

The CWU disputes this suggestion that a 5.5% pay rise is on the table, arguing that in reality, Royal Mail imposed an unconditional 2% pay rise on workers without consultation.

A further 1.5% is contingent on workers relinquishing certain conditions that the CWU deems unacceptable, the union claims, while RMG has also offered a £500 performance-related bonus that the union says is impossible to achieve.

U.K. inflation hit 10.1% in July and the Bank of England expects consumer price increases to exceed 13% in October. Citi economists this week projected that inflation would pass 18% in the first quarter of 2023 as the country’s energy cap continues to soar to unprecedented levels, deepening the cost-of-living crisis.

U.K. energy regulator Ofgem on Friday announced that the annual price cap for energy bills would rise by 80% from October, from £1,971 to £3,549, to accommodate soaring gas prices. Some market analysts expect the cap to rise above £6,000 during 2023.

The CWU has also questioned the company’s financial hardships, in light of substantial payouts to shareholders and top executives over the past year. Royal Mail contends that many employees are shareholders and have therefore received these payments, and that two-thirds of the £400 million worth of dividend payments in recent years have been funded by profits from its GLS arm in the Netherlands.

‘Lost confidence’

CWU Deputy General Secretary Terry Pullinger told CNBC that Royal Mail’s negotiating position had been “extremely aggressive” since January, despite the two parties having previously been working without incident on a proposed change agreement, designed to modernize the business. He added that since the turn of the year, “it’s their way or the highway.”

“Our members have voted in two massive ballots, one on pay and one on change proposals and both ballots have seen over 80,000 workers participating in both ballots and returning 97.6% and 98.7% yes for strike action,” Pullinger told CNBC via email on Tuesday.

“This despite unprecedented management propaganda, it is a massive vote of no confidence and shows that RMG have lost the confidence, respect and trust of their employees.”

Royal Mail Group made a £758 million profit in the last financial year, driven in part by increased postal activity during the Covid-19 pandemic, but the most recent quarter paints a gloomier picture, with Royal Mail — the U.K. postal service arm of the group — reporting a £92 million operating loss. Group profits were instead driven by its Dutch parcel-sorting subsidiary, GLS.

Royal Mail CEO Simon Thompson has insisted on discussing pay and conditions simultaneously, rather than as separate negotiations, a move which echoes the dispute between railway operator Network Rail and various transport unions.

Despite the company’s financial struggles, Thompson received an annual pay and perks package of £753,000 last financial year, including a £140,000 one-off bonus. Chief Financial Officer Mick Jeavons earned a reported £1.3 million.

“On one hand, they’re saying to all those employees that have earned that billion pound turnaround ‘there’s no money, the business is in trouble,’ and yet we’re rewarding the CEO with a £140,000 bonus. It’s total arrogance, it’s totally disproportionate,” the CWU’s Pullinger told CNBC via telephone.

“As an ordinary person, I’m looking at it and I’m thinking there always seems to be these moments in history where it just becomes so disproportionate – where the wealthy are getting so rich and ordinary people are getting poorer.”

‘Glue for society’

Pullinger noted the similarities between the Royal Mail dispute and others across the private sector.
“There must be millions of people that are not in unions that are going through a similar situation but the ones that are, you’re seeing it — the unions are standing up and saying ‘no, this is clearly wrong’,” Pullinger said.

“Something is wrong in the boardrooms of these companies that they think it’s okay to do that and tell the workers ‘nah, we’ve got nothing for you.’ Something is seriously wrong.”

CWU members feel their sacrifices during the pandemic and role in turning around Royal Mail’s financial fortunes during that period have gone largely without reward.

“People have been conditioned to think that they’re not valuable, or they don’t do anything special – if they work in a shop, or they drive a bus, or they deliver stuff or they work for Royal Mail – what the pandemic proved is that they’re actually the glue for society,” Pullinger said.

“It’s been ignored for far too long, and I think what key workers did, apart from having to go through all the mental trauma of putting our families at risk, I think they saw their true value.”