UK Postmen may deliver strike next month

The first national postal strike in more than ten years could cripple services as early as next month as the Communication Workers Union prepares to mount a strike ballot this week.

The union's postal executive is expected to ratify a strike ballot later today or tomorrow as it meets to discuss Royal Mail's plans for a pay freeze with only lump sums of Pounds 600 available if employees change their ways of working.

The last time that a strike ballot was mounted, the Communication Workers Union (CWU) narrowly lost a vote in favour. However, then Royal Mail had offered a 14 per cent pay increase over three years.

A strike at Royal Mail would come as the group is preparing to announce a large fall in profits for the year to the end of March. Its interim profits fell 86 per cent to Pounds 22 million and the organisation has lost more business since then.

Industrial action could also put Royal Mail on a collision course with the industry regulator if a strike causes problems for rival operators and if it is thought that Royal Mail could have averted disruption. Royal Mail's rivals tend to use the postal organisation for the final-mile delivery of the mail that they handle because they need its infrastructure. They could try to seek damages against the organisation if their services are disrupted because of a strike at Royal Mail.

Royal Mail has set out a 22-point plan to reduce costs by Pounds 350 million this year as it struggles to improve its productivity. The company is investing more than Pounds 1 billion in automation and is expected to cut up to 30 per cent of jobs -nearly 50,000 -when new equipment is installed. Its investment is coming from a Pounds 3.9 billion rescue package from the Government that was agreed in February.

The CWU's ballot is expected to run throughout this month and the result is likely to be announced at the union's annual conference early next month. The union would then have to give only a week's notice of industrial action.

A spokesman for Royal Mail said: "We have made a fair and competitive offer, which we are still discussing with the union. Royal Mail pays up to 25 per cent more than its competitors, but continues to lag behind in terms of efficiencies, which is why we need to invest more to improve productivity." The CWU refused to comment.

The postal group and the union are still locked in talks over plans to end the final-salary pension scheme and to introduce a controversial bonus scheme linked to phantom shares.

A strike looms as Royal Mail is without an executive in charge of its letters division after the recent sudden departure of Ian Griffiths after just over a year in the job. Adam Crozier, the chief executive, is taking responsibility for the operation. The postal group and the Government, as Royal Mail's shareholder, are also still struggling to find a deputy chairman. The post, which was advertised in October, is designed as a stepping stone to the chairman's position. Allan Leighton, the present chairman, is due to finish next spring.

Not in the post

The union wants

Pay to rise to the national average within five years – up 27% to Pounds 395 a week

Hours to be cut from 40 a week to 35, an increase in overtime rates and better annual leave

The union believes that this is possible because Royal Mail can grow its business and develop new products

It believes that Royal Mail should set the benchmark for the industry on pay and not follow poorer-paying competitors

It argues that Royal Mail signed an agreement to boost pay and conditions last year but is reneging

What Royal Mail offered

A pay freeze but lump sums of up to Pounds 600 if workers agree to changes in working practices

It is seeking to make savings of Pounds 350 million through a range of changes.

These include halving the number of collections from post boxes, reducing weekend working at mail centres and cutting the number of walks done by postal workers so that delivery staff will carry more.

The postal group says that it cannot afford a large pay increase and that it has to make cost savings because it is losing business to rivals. Competitors handle one in eight of all mail items now, although they generally have to put post back into Royal Mail's infrastructure for the last-mile delivery.

It says it is paying up to 25% more in wages than its competitors. It has to pay Pounds 730 million a year into the pension scheme to tackle a Pounds 6.6 billion accounting deficit.