Royal Mail: who wins?
It's not unusual for both employer and union in protracted industrial disputes to claim they came out of it best. But in the case of the Royal Mail deal, who has really won?
Initially, Royal Mail began by stating that postal workers were 25 pct overpaid and 40 pct under-worked, compared to its competitors, and that it was prepared to withstand up to six months of strikes to achieve the necessary modernisation in work practices and pension entitlement.
Of the final deal, Adam Crozier, Royal Mail chief executive, said it gave the company "a fighting chance" to compete successfully. Not exactly a ringing endorsement given that the stakes, according to Royal Mail, were "life" or "death".
And to this extent, the view of the Communication Workers' Union (CWU) would seem to be affirmed. It concluded that the agreement "settles all areas of the dispute … with significant gains on pay and related issues and the union's role in negotiating change in the workplace has been strengthened".
Indeed, the CWU has proclaimed that the deal is worth 6.9 pct over 18 months. Given that Royal Mail's first offer was a pay freeze, then a 2.5 pct annual increase, and that the government's pay norm is 2.5 pct, this deal looks very good. But when one scratches beneath the surface, the gloss soon starts to come off.
The 6.9 pct increase includes an earlier 1.5 pct increase that will only be awarded if set efficiency savings are made. The GBP 175 unconsolidated lump sum is a pay award of just 2 pct which is funded out of efficiency savings postal workers have already delivered. And the further GBP 400 payment in 2008 is again conditional on efficiency savings being made. This means a significant part of the pay deal is self-financing: postal workers will have to work harder to get the extra cash.
Royal Mail has been stopped from implementing some of its unilateral changes to shift patterns, like the changed starting times that give rise to many of the recent unofficial local walkouts during the national strike. And early allowances – important for supplementing basic wages – have been maintained.
But the CWU has conceded much ground on work flexibility. From January next year, all offices will have to implement changes to working patterns to allow the number on duty to match the up and downs in mail volumes across the day, week and year. Moreover, the union has also agreed to local trials on flexibility that will be rolled out nationally thereafter as well as taking part in joint working parties to look at other avenues of achieving flexibility.
Given past experience, some offices where the union is stronger will be able to ameliorate the impact of the drive to flexibility but others will not. Collectively, this means working conditions will become divergent throughout offices, undermining the cohesion of the national union.
The decoupling of pensions from a pay deal has been a significant concession from Royal Mail but this has been a double-edged sword. In return for pension reform being dealt with separately through a working party, the CWU has had to agree to the principles of ending the final salary pension scheme for new entrants and the raising of the age of retirees who are eligible for the full pension.
The debate in the CWU will centre not on whether Royal Mail has been thrown back. It has. Rather, it will focus on whether the CWU has still conceded too much and whether more or harder hitting action could have won a better deal. The union is between a rock and a hard place because it accepts that change is needed as a result of deregulation and competition while at the same time not making any headway with the government in changing the regime of competition.
The fact that the CWU postal executive debated the deal for three days, further clarification with Royal Mail was then needed and the executive's vote was only 9:5 for accepting, means that the debate will be a highly charged one.
