Royal Mail faces £100m hit from strikes

One in five letters and parcels sent first class do not arrive the next working day, Royal Mail has admitted.

Four days of postal strikes that begin tomorrow are set to deliver a £100 million blow to Royal Mail’s finances.

The company is in deadlock with the Communication Workers Union in a dispute over pay and modernisation.

About 115,000 Royal Mail workers plan 24-hour industrial actions tomorrow, on Wednesday next week and on September 8 and 9 after rejecting a below-inflation pay offer. The union is also set to launch separate strikes, on dates to be announced, after a ballot on workplace changes.

Royal Mail told the stock market this month that the initial strikes would leave it “materially lossmaking in the 2022-23 financial year”.

The action is expected to cost it about £25 million in revenue a day, comprising £10 million in letters and £15 million in parcels.

Staff have been awarded a 2 per cent pay increase, backdated to April, and a further 3.5 per cent increase if they agree to workplace changes. Royal Mail, which is losing £1 million a day, has said its offer would add £500,000 a day to its payroll.

Terry Pullinger, the CWU deputy general secretary, has accused the company’s executives of treating staff, who had “worked miracles during the pandemic”, with “complete contempt”. The union has said it will oppose attempts to “whittle away people’s hard-won working conditions”.

Royal Mail is struggling to modernise and to cut costs, with letter volumes down 60 per cent since privatisation and falling at 6 per cent to 8 per cent a year. It wants to focus on its profitable parcels business through changes to systems and practices. Bosses blame unions for using hundreds of agreements, inherited from before privatisation and supplemented when the business was listed in 2013, to block reforms.

Keith Williams, chairman of Royal Mail and a former chief executive of British Airways, said: “Management are trying to reinvent letters for the internet age. The core business is moving into parcels, which requires a lot of business change and using two new superhubs.

“A postie is carrying a third fewer letters and being paid 26 per cent more. This cannot continue unless they can deliver parcels. We would talk only if there is change. Without it, there will be no business. There have been 26 pay rises since privatisation and it is killing the goose.”