Since Royal Mail was privatised by the Coalition government in 2013, bosses and the CWU postal union have spent half the time in dispute. Union leaders bent over backwards to keep the Agenda for Growth 2014 agreement in place, while Royal Mail squeezed the agreement for savings, particularly pushing a part-time workforce.

But those quickly dried up, and as changes in the postal market kicked in, with letters volumes declining and parcels rising, and competition sharpened from non-unionised rivals like Amazon, shareholders and top bosses moved to attack the workers as the only source of hiking profit, and unlock the millions tied up in their jobs, terms and conditions. The non-stop disputes in Royal Mail since 2017 are the inevitable result of privatisation.

On being brought in as CEO two years ago, Rico Back immediately began to undermine the Four Pillars agreement, with the ink on it barely dry after months of dispute. A series of attacks, like hiving Parcelforce off into a separate company, and collaboration behind the scenes with the Tory government against the Universal Service Obligation, escalated to a full scale assault under the cover of the corona crisis. 

On Postal Workers Day, 29 April, the company announced huge imposed shift changes to “help” workers, brushing the union aside. The union and its members faced the prospect of a humiliating defeat and the floodgates opened for the rest of Back’s restructuring plans, with the Tory review of the USO waiting in the wings to cut its legal six day delivery requirement. 

Instead Back was forced into a humiliating climbdown by the CWU in an unprecedented move calling for defiance and workers threatening a national walkout from below, and two weeks later he was gone, resigned (or pushed), though not without banking his £1 million golden goodbye.

Back achieved nothing for the millions he has made off Royal Mail in his two years, other than the share price falling 65 per cent and the current dispute. His takings, including a £6 million golden hello, his seven-figure annual “package” built around his six figure salary, and buying up cheap shares, must run in excess of £10 million. But that’s capitalism for you, whose paid-up economists explain patiently to workers why we should be paid less to “incentivise” us but bosses need more to achieve their best results, getting millions just for showing up – or even if they crash the company. 

It was great to see the back of Rico, but workers should be on guard and not fall for promises that things have changed. 

Back to the Future

The new interim Royal Mail Chairman Keith Williams and UK Operations CEO Stuart Simpson – formerly part of the Back management team – want to accelerate Back’s plans, while committing to the Four Pillars too. Can the union really make them square that circle in favour of postal workers?  

The 25 June financial report showed falling profits, claiming Royal Mail would have been in the red last year if not for the general election and other one-off windfalls. It stated the firm would continue Rico’s strategy “to move from being a UK-focused letters business that also delivers parcels to an international parcels business that delivers letters in the UK”. Keith Williams, a veteran of battles against the unions in British Airways, had already stated the need for “an accelerated pace of change across the business”.[1] More recently he announced the company was losing £1 million every day due to corona costs: PPE, staff absence, and a rise in parcels undercut by a bigger loss in letters and revenue. 

Rico’s plan and then the corona crisis have seen this year’s dividends cut, putting millionaire shareholders on edge. Industry analysts have detected hints of a plan to cut loose Royal Mail Group’s profitable global arm GLS, to create a windfall for shareholders: the company’s annual results published talk about “few synergies” between the two wings, and “the opportunity remains to create more value for shareholders”. This is code for selling off the lucrative parts, the better to expedite restructuring by exposing the UK operation to the harsh winds of competition. And just as Back went out the door, news surfaced that shadowy Czech billionaire Daniel Křetínský – aka the “Czech sphinx” – had purchased a major £100 million stake in the company for reasons unknown – a corporate raid aimed at prying loose GLS? There is also the upcoming USO review by the government – any cut in the obligation will lead to thousands of job losses.  

Whatever approach management takes, whether revisions to working practices or something more radical, in the long run Royal Mail cannot make a profit delivering parcels separately to letters at workers’ current terms and conditions, as CWU leaders have pointed out. 

The question is, with declining letter volumes, whether Royal Mail can make a profit at all without forcing workers onto lower wages, worse terms and conditions and precarious forms of employment, from zero hours contracts to bogus self-employed status like its competitors.

The turn to part-time employment since even before 2014, with some contracts 20 hours a week or below, was already a move in that direction, creating a two-tier workforce that the Four Pillars was supposed to eliminate.

Nationalisation

Postal workers need a longer-term solution, and that can only be nationalisation of the postal network and the 35 hour week. If Royal Mail provided an essential service in the lockdown, and it did, and is not solvent due to its costs, it should be renationalised and reintegrated with the Post Office.

The bosses don’t need a penny in compensation – the hedge funds and other big shareholders have taken well over a billion pounds out of the business in seven years of privatisation, and more in speculating in Royal Mail shares – and now they are piling in to bet on its failure.[2]

In a video to CWU members, Dave Ward said that, to come up with a sustainable plan for Royal Mail, “we will have to talk to government about that and the USO.” It is time the CWU leaders put forward union policy which is to call for renationalisation. As Red Flag stated before, that is the only possible way a “fourth emergency service” could have worked. They should unite the TUC behind that call now, and link it to a wider campaign to nationalise all employers making redundancies or closing due to corona.

Nationalisation may seem like a big task, but in fact the crisis has unleashed a wave of unionisation and anger across the working class in Britain. The Tory government is preparing to make workers pay for the corona crisis bailout for business, just like they made us pay for the bank bailout in 2008, because last time the leaders of the unions and Labour did nothing. This time let’s learn the lessons and organise a mass resistance to the coming austerity, and use it to build support for our dispute and nationalisation.

Now read Union Makes Concessions as Talks Begin with Royal Mail


[1] https://dailybusinessgroup.co.uk/2020/05/royal-mail-to-quicken-pace-of-change-after-ceo-quits/

[2] https://www.fnlondon.com/articles/hedge-funds-load-up-on-royal-mail-short-bets-in-rocky-year-for-the-stock-20200521