Firms wait to take advantage of UK post strike

Foreign firms see an opportunity to move in as a strike seems inevitable.

The Royal Mail is in a dispute with the postal unions that could turn the clock back to the disastrous industrial relations of the 1970s.

Evoking the image of British Leyland is guaranteed to send a shiver down the spines of managers and directors. And yet that is what management at Royal Mail is doing.

When an industrial dispute erupts, it is all too easy to say that militant action will ravage Britain's ability to compete. But as the Communications Workers' Union (CWU) plays hardball with Allan Leighton, chairman of Royal Mail, the hyperbole almost seems justified.

The two parties are preparing to go before Acas – the conciliation service that is another symbol of a bygone age of industrial strife – but there is a sense of resignation that the first serious postal strike in seven years is inevitable.

Next week post workers will vote on whether to strike. They are expected to be in favour and this could mean walkouts across the country by the middle of next month.

The pay issue at stake is complex. It is linked to Royal Mail's drive for greater efficiency. Part of that process is the streamlining of services to one delivery a day. The deal Leighton envisages is designed to bring his post workers with him and tie them in to the reforms he has begun. Leighton says that 14.5% is on the table. That, he argues, would take all the workers up to a minimum of Pounds 300 a week – a figure the unions have been pushing for.

The CWU says that the only cash on offer at the moment is a 3% rise in October and a further 1.5% in April.

There is also the issue of the London weighting. The capital's workers believe they are losing out and want better terms. This is likely to prove the sticking point and result in a vote for a strike.

Union politics plays a part here. John Keggie was the CWU deputy general secretary until recently. He failed to get re-elected and was replaced by Dave Ward. Keggie was regarded as a moderate and a decent counter-balance to Billy Hayes, the left-wing Liverpudlian who is general secretary.

Ward stood in London on a ticket of sorting out the London weighting. The members duly elected him and now it is payback time. Ward knows he must deliver something beyond the witty put-downs about the Leighton pay offer having "more strings than the Philharmonic Orchestra".

What this means is that London post workers are likely to turn out in big numbers when the ballot is held, probably on August 21. Taken as a whole, however, the national turnout from the union's 160,000 members is likely to be between 20% and 25%. This means a vote for industrial action is likely to be passed.

Ward believes that Leighton is not telling the full story by claiming that 14.5% is on the table.

He says: "We are concerned about some of the statements he has made. We are not against change in the industry, but we do believe that our workers deserve better than is on offer at the moment. If management believes workers are the most important part of the business, they should show it by offering more up front."

He added that he could not accept that someone like Adam Crozier, the new Royal Mail chief executive, knew enough about the industry to be in a position to start telling workers what is in their best interests.

Leighton is bracing himself for a highly personalised battle. The opening shots have already been fired. A CWU poster is portraying him as a spivvy character trying to buy off workers behind the backs of the union bosses. It claims Leighton is in line for a Pounds 3m pay packet.

The Royal Mail chairman wants the poster pulled because the wild claim about his pay is untrue. However, he tells friends that he knows the tactics are those classically used by unions under pressure.

Management believes that Leighton has angered the unions by using a direct approach. He has gone straight to post workers and laid out exactly what is on offer.

His actions have been those of a man who knows what is at stake. Despite the job cuts and stemming of the huge losses, the mail service in Britain is at a crossroads. The market is about to be opened to competition and predators are waiting to pounce.

Foremost among them is Deutsche Post. Its chairman Klaus Zumwinkel knows that a harmful industrial dispute will make his company's life a lot easier as it strives to make an impact in Britain.

Royal Mail executives also fear that union action will play into the hands of the Germans. One says: "This is a company that was within a whisker of being in administration.

"Royal Mail is now making strides, but there is still an undercurrent of union hostility and some of the practices are exactly like those used 25 years ago at companies like British Leyland. We do not need reminding what happened there."