UK postmen bag 14% rise but deliver threats

Strike ballot after union rejects London weighting allowance

ROYAL MAIL is on a collision course with unions over a 14.5 per cent pay offer that could lead to widespread walkouts.

Allan Leighton, chairman of the loss-making organisation, has infuriated union officials by going over their heads and appealing directly to workers in a letter offering the pay rise over 18 months.

Leaders of the Communication Workers Union are poised to reject the offer, which would give the lowest paid up to Pounds 38 a week more. The package had "more strings than the philharmonic orchestra", a union spokesman said.

The clash could mark the first serious showdown between the union and Royal Mail for several years, harking back to the time when the organisation was involved in half the strikes in Britain.

Already a strike is looming in London after the rejection of the London weighting element of the package, which is linked to productivity increases. Norman Candy, a London divisional representative who is on the union's national postal executive, declared that a strike across the capital seemed inevitable, with a ballot expected in the next few weeks.

The CWU, which is led by Billy Hayes, one of the "awkward squad" of left-wing union leaders, may become more hardline over pay and productivity after the recent election of a new deputy general secretary. Dave Ward, a former London official, has criticised his predecessor John Keggie for making threats of industrial action and then not following them through.

At his conference last month Mr Ward gave warning that the union wanted a substantial pay increase and that any warning of industrial action in the future would be followed by a walkout.

Mr Leighton, who was drafted in by the Government to rescue the organisation, vented his anger with the union in a hard-hitting letter that has been sent to all 180,000 Royal Mail employees. He says: "I got into trouble last time for talking to you direct, telling it straight. Well, tough, that's how we do things around here now." The "last time" was when he wrote to workers last year complaining that negotiations between managers and unions were like wading through treacle.

Royal Mail bosses' recent bonuses have also angered union members. Mr Leighton, who is paid Pounds 20,000 as a part-time chairman, received a Pounds 165,000 bonus while Adam Crozier, the chief executive, who is paid Pounds 500,000, received a Pounds 57,400 bonus for two months at the state-owned organisation. The bonuses were paid because Royal Mail reduced its losses from Pounds 1.1 billion last year to Pounds 611 million.

Mr Candy said: "They can pay the bosses that sort of money, but all they offer us is an increase of Pounds 2 per week in London weighting. It is an absolutely abysmal offer."

The CWU in London is, in common with other unions such as Unison, seeking a large increase in the payments to deal with the high cost of living in the capital. The union wants the allowance for postal workers in outer London to rise from Pounds 1,900 to Pounds 4,000. Royal Mail has offered an extra Pounds 100 this year and then Pounds 200 more if productivity targets are hit.

Relations between Royal Mail and the unions have become increasingly fraught because Mr Leighton believes that he is not getting the reforms he needs -even if union leaders sign up to them.

He is said to think that the union structure is such that changes to working practices are continually blocked and that he therefore needs to appeal to workers directly.

Royal Mail, which is losing Pounds 750,000 a day, has emphasised that it can afford the 14.5 per cent pay increase only if it is funded by changes to productivity at delivery and sorting stations.

Mr Leighton says in his letter: "The only 'string' (and forget what others might say) is that we must implement the key change programmes -that we all know about and which I know you understand."

As part of the pay package, which begins with a 3 per cent increase across the board in October, each local office will have its own target. This has to be met before workers can win Pounds 15 of the Pounds 38-a-week total potential pay increase.

A further Pounds 11.30 will follow if all offices throughout the country reach their targets. Union officials privately believe that a national achievement of the productivity targets is impossible partly because some offices, especially in large cities, will resist change. In an effort to win direct support for the deal, Mr Leighton has set up a hotline for those who want to know more or give their views.

If his gambit backfires, some in the industry fear that it could trigger a return to confrontational relations between the unions and Royal Mail. Relative calm has prevailed for the past three years since the Government ordered Lord Sawyer to conduct a review of industrial relations at the organisation. But many also view the current pay deal as crucial to the next step in the recovery of Royal Mail which has been bailed out by massive state loans.

This year Mr Leighton believes it can make a small profit. That would be the first time the group had moved into the black for five years.

Leading article, page 21

(c) Times Newspapers Ltd, 2003