Royal Mail: who wins?

From the Guardian Comment is free website 

The dispute has been resolved, we are told. But behind the headlines, it’s important to assess who benefits most.

Gregor Gall

October 25, 2007 11:30 AM

It’s not unusual for both employer and union in protracted industrial disputes to claim they came out of it best. But in the case of the Royal Mail deal, who has really won?

Initially, Royal Mail began by stating that postal workers were 25% overpaid and 40% under-worked, compared to its competitors, and that it was prepared to withstand up to six months of strikes to achieve the necessary modernisation in work practices and pension entitlement.

Of the final deal, Adam Crozier, Royal Mail chief executive, said it gave the company “a fighting chance” to compete successfully. Not exactly a ringing endorsement given that the stakes, according to Royal Mail, were “life” or “death”.

And to this extent, the view of the Communication Workers’ Union (CWU) would seem to be affirmed. It concluded that the agreement “settles all areas of the dispute … with significant gains on pay and related issues and the union’s role in negotiating change in the workplace has been strengthened”.

Indeed, the CWU has proclaimed that the deal is worth 6.9% over 18 months. Given that Royal Mail’s first offer was a pay freeze, then a 2.5% annual increase, and that the government’s pay norm is 2.5%, this deal looks very good. But when one scratches beneath the surface, the gloss soon starts to come off.

The 6.9% increase includes an earlier 1.5% increase that will only be awarded if set efficiency savings are made. The £175 unconsolidated lump sum is a pay award of just 2% which is funded out of efficiency savings postal workers have already delivered. And the further £400 payment in 2008 is again conditional on efficiency savings being made. This means a significant part of the pay deal is self-financing: postal workers will have to work harder to get the extra cash.

Royal Mail has been stopped from implementing some of its unilateral changes to shift patterns, like the changed starting times that give rise to many of the recent unofficial local walkouts during the national strike. And early allowances – important for supplementing basic wages – have been maintained.

But the CWU has conceded much ground on work flexibility. From January next year, all offices will have to implement changes to working patterns to allow the number on duty to match the up and downs in mail volumes across the day, week and year. Moreover, the union has also agreed to local trials on flexibility that will be rolled out nationally thereafter as well as taking part in joint working parties to look at other avenues of achieving flexibility.

Given past experience, some offices where the union is stronger will be able to ameliorate the impact of the drive to flexibility but others will not. Collectively, this means working conditions will become divergent throughout offices, undermining the cohesion of the national union.

The decoupling of pensions from a pay deal has been a significant concession from Royal Mail but this has been a double-edged sword. In return for pension reform being dealt with separately through a working party, the CWU has had to agree to the principles of ending the final salary pension scheme for new entrants and the raising of the age of retirees who are eligible for the full pension.

The debate in the CWU will centre not on whether Royal Mail has been thrown back. It has. Rather, it will focus on whether the CWU has still conceded too much and whether more or harder hitting action could have won a better deal. The union is between a rock and a hard place because it accepts that change is needed as a result of deregulation and competition while at the same time not making any headway with the government in changing the regime of competition.

The fact that the CWU postal executive debated the deal for three days, further clarification with Royal Mail was then needed and the executive’s vote was only 9:5 for accepting, means that the debate will be a highly charged one.

In the background, reduction in overtime availability and the continuing prospect of mass redundancies will also inform the conclusions postal workers draw about whether to vote “yes” or “no” in the membership ballot. Already, royalmailchat – postal workers’ own web forum – has been inundated with postings and debate.

No matter the outcome of the ballot, more “mail misery” will ensue, as grassroots postal workers strive to counter the company’s flexibility drive because the unspoken contract of low pay compensated by “job and finish” is under the cosh. The larger the “no” vote, the more emboldened the resistance will be.

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