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Boss Simon Thompson insists the pandemic has triggered “a structural shift”, turbocharging demand for parcels and accelerating the long-term decline in letters. Despite a mini-revival in recent months, letter deliveries are a fifth lower than before coronavirus erupted.
Yet this is Royal Mail. For a company that has been bringing us our post for the last 500 years, it has an unfortunate habit of struggling to deliver on its promises.
A warning of rising costs is par for the course in these squeezed times but it faces more than some: wage spikes for temporary workers; a £50m hit from increased National Insurance contributions; a £40m knock from a reduction in the working week; as well as the unwinding of fuel and energy hedges at the worst possible time.
Relations with the Communication Workers Union have improved but will continue to be tested, despite a generous pay agreement in February that ended a long and damaging standoff. With the current pay deal only lasting two years, another must be negotiated soon, and in a very different inflationary environment to before.
There is already growing disquiet among posties about changes to their work schedules agreed as part of the detente, which some claim has led to mail being undelivered at the end of the day because of staff shortages at delivery offices and badly organised rounds.
Thompson continues to walk a tightrope between overseeing the modernisation required to drag the Royal Mail into the 21st century and not angering the unions again by moving too quickly.
Yet a warning that “there is still much more to do…particularly to combat competitive and inflationary pressures” smacks of a man in a hurry. With another £190m of savings on the way as a result of further automation and other cost-cutting measures, another disruptive showdown may be in the post.
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