Royal Mail faces £1bn showdown with union

Royal Mail is facing an almighty bust-up with a union that has issued demands costing £1billion – including a pay boost for posties who want a shorter working week. 

A series of strikes is looming at Royal Mail as the UK’s summer of discontent worsens. The postal giant claims it is being held to ransom by a union ‘stuck in the past’. 

Demands made by the Communication Workers Union include hiking salaries by the rate of inflation, which has soared above 10 per cent, The Mail on Sunday can reveal. 

The union wants the working hours of its members to be reduced and is insisting that those aged over 55 should be given lighter duties. 

In addition it has called on Royal Mail to launch a national TV campaign to promote letter writing despite the company’s strategy to become a parcels-based business. 

Royal Mail has run letter-writing commercials along these lines in the past, but not for more than a decade. 

The union presented its proposals as a blueprint for Royal Mail’s future. But the company sees its ideas as unrealistic and unaffordable. 

A spokesman for Royal Mail said: ‘The CWU’s plans to transform Royal Mail come with a £1 billion price tag and don’t come close to delivering the changes needed to ensure the business can grow and remain competitive in a fastmoving industry. 

‘Their vision is to work fewer hours for inflation-linked pay and to invest millions in a letters market in terminal decline. 

‘There is no future living in the past, clinging to outdated working practices, ignoring technological advancements and pretending that Covid has not significantly changed what the public wants from Royal Mail.’ 

The FTSE giant, which was privatised in 2013, earned more from parcels than letters for the first time this year. Its bosses, led by chief executive Simon Thompson, want to offer a seven-day operation to help compete with rivals such as Amazon.

Relations between Royal Mail and the unions have grown increasingly frosty with claims that the CWU has rebuffed recent attempts to hold talks. 

Royal Mail has offered staff a two per cent pay rise and other performance-linked bonuses. The company says the package is worth up to 5.5 per cent. 

A source close to the company said: ‘We are losing a million pounds a day. The 5.5 per cent pay deal adds an extra £230million a year to our pay costs. The union’s ideas would add an extra £1billion.’ 

The parties have been unable to reach an agreement despite months of negotiations. More than 115,000 Royal Mail workers are set to walk out for four days in August and September, following a ballot last week. Members voted by 98.7 per cent on a 72.2 per cent turnout to take industrial action.

CWU general secretary Dave Ward said: ‘Nobody takes the decision to strike lightly, but postal workers are being pushed to the brink. 

‘There can be no doubt that they are completely united in their determination to secure the dignified, proper pay rise they deserve. 

Dispute: Royal Mail bosses say the CWU is living in the past

‘The CWU’s message to Royal Mail’s leadership is simple – there will be serious disruption until you get real on pay.’ 

Royal Mail has stressed that any significant increase must be aligned with its attempt to revolutionise working practices. 

An insider said: ‘We’ve been really clear that we want to pay more, but it’s got to be linked to change.’ 

Royal Mail has seen its performance dwindle in recent years. The number of letters sent is down 60 per cent from the peak and is expected to fall further. 

A trading update in July revealed that Royal Mail made a loss of £92million in the first quarter of this year. 

A Royal Mail source said the CWU’s approach is leading its members ‘to an uncertain future’. The source added: ‘We were very clear that the commercial impacts of strike action would make it very difficult to secure the long-term future of jobs for our people.’ 

Royal Mail has already warned that it could split up its business unless it achieves ‘significant operational change’.