Royal Mail commits to transformation

Royal Mail has provided further detail on the framework agreement reached with the Communication Workers Union (CWU) on the strategy and future direction of Royal Mail, operational change, pay and job security.

Royal Mail and CWU have committed to rebalance our focus and resources from the declining letters to the rapidly growing parcels market, creating a more efficient business that is better aligned to the changing needs of customers.

Both parties recognise this will require new ways of working, a more flexible business, greater use of technology and the insight of our workforce. This will also provide both job security and job opportunities for the future.

CWU has commented on the agreement on their website: “This agreement marks the end of our two year dispute with Royal Mail Group and brings closure to one of the most adversarial periods of our history. It builds upon and does not replace our previous agreements including the spirit and intent of the 2018 Four Pillars Agreement. It reflects and re-positions a joint philosophical approach to the future based on growth and not decline, opportunity and optimism, and a re-designed Royal Mail Group, importantly including Parcelforce, thriving in the modern day.”

Focus on swifter change
The agreement will allow Royal Mail to make more frequent revisions to the network and introduce the use of technology to improve both customer service and efficiency. Deployment of revisions and realignment activity is planned for all operational areas by the end of October 2021, with annual revisions thereafter. The introduction of technology will replace handwritten manual sign-in / signout and provide more meaningful data to enable a more efficient service to customers.

There will also be a revised and quicker dispute resolution process to enable agreement on change to happen more quickly.

Strategy and future direction of Royal Mail
A review of the operational network will conclude by April 2021 to support and build on proposals for the parcel network, maintain an efficient letters operation and prioritise investment for further expansion. This will include how we launch and operate our new parcel hubs and the introduction of dedicated van delivery duties for parcels, as well as exploring the opportunity for more frequent deliveries throughout the week.

Commenting on the agreement, Interim Executive Chairman Keith Williams said: “We have a window of opportunity to focus Royal Mail on what our customers want today – an ever growing need for more parcels, whilst providing a sustainable letters service. This agreement provides a framework to do just that, but the proof will be in the pudding. We have been far too slow to adapt in the past and now need to deliver change much more quickly.”

The key initiatives in the agreement are:
• The roll out of scan in, scan out technology: new scan in, scan out equipment (Auto Hours Data Capture) will be introduced in all sites commencing January 2021 to replace handwritten
sign in sheets. This will create a safer working environment and help us understand where we have opportunities to align resources more closely to demand.

• More regular revisions: rapidly changing letter and parcel volumes mean we need to adjust our operations more regularly. We will develop and implement a new, simplified revision process in delivery and ensure that each function rebalances and realigns resources to workload, and workload is allocated fairly. These revisions will be deployed starting Q4 2020-21.

• Development of Resource Scheduler: a three-month trial will restart in February 2021. Resource Scheduler draws together data from across the operation to enable better alignment of duty sets and rosters to demand. Assuming a successful trial outcome we will then begin deployment.

• Nationally consistent standards to improve productivity: Royal Mail and CWU will work together to implement efficient ways of working to raise overall standards across the
operation based on an agreed measure and standard of productivity.

Pay and job security
We are committed to remaining the best employer in our industry. Subject to ratification by CWU members, we have agreed the following two year pay deal for CWU colleagues:
● 2.7% pay increase effective from April 2020; and
● A further pay increase of 1% with effect from April 2021; and • The second hour of the shorter working week to be implemented at the point that the 2021 programme of revision activity is deployed in a function/unit and no later than the end of October 2021.

We now need to work together with CWU to implement the changes we need, in order to capitalise on the significant growth we have seen in parcels so far this year. We continue to work with CWU to operationalise and finalise the detail on many aspects of this agreement.

Following the recent vote in favour by the CWU Postal Executive, CWU will now put the final deal to a vote of its members. We will provide a further update in due course.

Trading update: 8 months to November 2020
We have continued to see strong parcel growth during October and November. In Royal Mail, revenue in the eight months to November was £380 million higher compared to the same period last year, again driven by e-commerce activity, lockdown restrictions during November and the beginning of peak period.

In GLS, revenue in the eight months to November grew by 21.9%, driven by continued growth in B2C and international volumes, including some positive impacts on volume from new lockdown
restrictions across our footprint.

A trading update covering the nine months ending 27 December 2020 is expected to be issued in February 2021.