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Royal Mail strikes will damage businesses - including their own

Today would be a great day to strike. PA

News that Royal Mail workers are to go on strike on 4 November is unlikely to be received well by the general public or the business community. The usual threat of strikes in the run-up to Christmas will not be welcome either.

Earlier this week Royal Mail confirmed that full-time employees received 725 shares which were valued at £3,545 at close of trading on Tuesday. Though the employee shares can’t be traded for three years, that’s still quite a windfall.

Add to that the prospect of a three-year pay deal worth 8.6%, rejected by the union in July, then some might argue the posties are not doing too badly compared to other workers. Many private and public sector employees have seen annual pay increases of less than 1% in recent years - well below the rate of inflation, thus meaning a paycut in real terms.

The main thrust of the dispute is the legally binding agreement sought by the Communication Workers Union (CWU) on job security, pay and pensions. It also wants a say in how Royal Mail will operate as a private entity.

The union is concerned that privatisation will result in shareholders taking more out than they put in and that financial gains will be as a result of cut-throat employment practices and reduced employment rights, as seen in competitor organisations.

Presently the CWU is adopting a hard line and is not prepared to concede on any points, but for how long they will maintain this position remains to be seen. When it comes to the strike days, two things are certain: the Royal Mail’s management will over-emphasise the economic damage to the company and to British business, and the CWU will talk up the support for the strike.

In any case, the headline figure of 78% support for strike action is not as convincing as it might appear. With a turnout of 63%, less than half of those entitled to vote were in favour of going on strike.

In anticipation of the “yes” vote, Moya Greene, the head of Royal Mail, called for more protection for businesses from industrial action. The management of Royal Mail were quick to point out the low turnout yesterday, the underlying message being that strikes which are harmful to the business should not be permitted when only supported by a minority of the workers involved.

Industrial action is set to ramp up as the union prepares to ballot the membership on boycotting mail from rivals like rivals TNT, UK Mail and Citipost. The Royal Mail currently carries out the “sorting office to doorstep” delivery of their mail, and a boycott would increase the disruption as many large businesses such as banks have contracted their postal services to private sector firms.

The ballot will take time to organise as statutory notifications are required, but if the outcome is a “yes” vote, as it will be, the boycott could be in place before Christmas.

If the Royal Mail wants to take a tough stance, they could describe the boycott by workers as failure to perform the whole of their contractual duties and refuse to pay wages. This view will resonate with the coalition government who will no doubt look for ways of making strike votes more representative of the whole workforce and more difficult to achieve. Although the turnout was over the threshold called for by Boris Johnson and the CBI, the debate on minimum turnouts in strike ballots will be re-opened and extended to discussions about requiring a majority of the workforce to support industrial action.

Although Vince Cable has distanced himself from the dispute and said that it’s up to Royal Mail management and the union to find a solution, the Business Secretary will be under pressure to consider ways of restricting industrial action further.

Of greater concern will be the difficulties created for the business community by the strike. While there are signs of recovery, the economy is still fragile and many businesses are teetering on the edge. Forget the colourful cards; sending out parcels in the run-up to Christmas is crucial for mail-order businesses. For many firms this peak period is what keeps them going for the rest of the year and sourcing alternative delivery arrangements will be the main concern in the coming weeks for those businesses that rely on postal services. Once these alternatives are in place, these businesses are unlikely to return to Royal Mail.

Strikes lasting for a single day are mainly symbolic, and the statutory notification requirements allow the public and businesses to make contingencies. However, if the CWU calls on its members to strike for longer periods then support for the industrial action will reduce.

For the posties no work means no pay, and in the run-up to Christmas this will hit them hard. Much of windfall from their shares could be wiped out if the dispute rumbles on.

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