Royal Mail freeze wages

Royal Mail risked a showdown with trade unions by imposing a pay freeze on its 181,000 staff, the biggest workforce to have been penalised so far in the recession.

Royal Mail risked a showdown with trade unions by imposing a pay freeze on its 181,000 staff, the biggest workforce to have been penalised so far in the recession.

BT has already frozen the pay of its 100,000 workers, and Unite, the union, has agreed to a temporary pay freeze for 13,500 cabin crew at British Airways. A large number of carmakers have introduced either pay freezes or cuts in income as they have reduced working hours.

However, this is thought to be the first time that the postal group has decided to freeze staff pay and unions warned that it would lead to “strife” and inevitable industrial conflict.

Jon Millidge, human resources director at Royal Mail, wrote to union leaders warning them that “the company is facing a very tight financial position and we do not envisage being able to increase pay rates for any colleagues (including all directors and managers)”. A pay review had been due this month after the expiry of the 18-month 6.9% deal.

Royal Mail has blamed the pay freeze on the economic downturn along with a structural decline in its market as communication swings away from post to digital.

Mr Millidge’s letter says: “The global economic turmoil has exacerbated the structural decline in postal markets in the UK and around the world, with the UK mail market now declining between 8 to 10% compared to last year.”

Royal Mail calculates that it loses £70m a year for every 1% drop in its business. In January it said that it had returned all its core operations to profit for the first time in 20 years. It reported that profits for nine months to December stood at £255m compared with £162m in the previous financial year, which had been hit by the lengthy strike action.

Dave Ward, deputy general secretary of the Communication Workers Union (CWU), said: “Royal Mail is weathering the recession well and has told staff the value of the company has significantly increased, effectively raising hopes for a decent pay rise.

“The people who run Royal Mail have again misjudged an important decision. For Britain’s highest-paid civil servant to impose a pay freeze on workers who earn less than the UK average wage is outrageous. This inequality will lead to strife.”

The CWU says that most Royal Mail workers earn £347.61 a week before tax or other deductions compared with the UK average of £438.

The pay freeze will apply to all workers in Royal Mail, Post Office, Parcelforce and the organisation’s headquarters.

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