The Virgin Media O2 redundancies show the CWU should not have trusted Royal Mail

Virgin Media O2 is laying off 10% of its workforce, amid a mountain of debt – yet oddly, they also have made billions in profits, and paid over £1bn in dividends to shareholders. Yet the Communication Workers Union (CWU) has issued a tepid response at best. This is probably because it looks like it made an error of judgement months ago over a pay deal with the company. Moreover, it sends a warning to the other deal the CWU has just agreed with Royal Mail – because if Virgin Media O2 can strike a pay deal with the CWU and then lay off countless staff – Royal Mail could well do similar.

Virgin Media O2: if in doubt, lay off staff

UK telecoms group Virgin Media O2 provides phone, broadband, and television services. However, it announced on 24 July it will cut up to 2,000 jobs, or over 10% of its staff. Spanish operator Telefonica and US group Liberty Global merged their UK units O2 and Virgin Media in 2021. The company said in a statement for Agence France-Presse (AFP):

As we continue to integrate and transform as a company, we are currently consulting on proposals to simplify our operating model to better deliver for customers.

The group employs 18,700 staff – and after its statement, the CWU hit back. The union’s assistant secretary Tracey Fussey said in a press release:

This news is causing a tremendous deal of anxiety among our membership, who are now feeling vulnerable about their jobs during an historic economic crisis.

The confirmation of job losses is a tremendous disappointment, and we will be doing everything we can to mitigate against the redundancies.

The announcement of 2000 redundancies includes changes already made this year. We will continue to actively work with VMO2 through the consultation processes.

Workers deserve clarity and security over their futures, and the CWU will do everything in our power to ensure that is what our members will get.

This news was not new, though. The Mirror reported at the end of June that the company was planning between 800 and 2,000 lay offs.

The problem is, Virgin Media O2’s job cuts have come just two months after it reached a deal with the CWU and workers over pay and conditions.

The CWU: a deal amid redundancies?

Virgin Media O2 had originally tried to impose a 2% rise in 2022. But after the CWU balloted for strike action, it backed down. The union wrote at the end of May that:

Members across Virgin Media O2 have voted by nearly nine-to-one to accept a CWU-brokered pay deal which delivers fully consolidated rises for all CWU represented grade employees in excess of 7, 8 or 9% this year – plus a cash lump sum of £400 to be paid in June.

The company’s final offer… was accepted by 86.5% of members participating in a consultative ballot…

Taking both consolidated and unconsolidated elements into consideration, the deal is worth just over 10% in cash terms this year for members working in O2 stores.

Fussey said at the time that the deal was:

at the top end of pay settlements across the whole of British industry at present.

Now, why could that have been? Probably because bosses at Virgin Media O2 knew all along they’d slash jobs to pay for it.

The broadband giant: billions in profit and dividends

Virgin Media O2 actually increased revenues in the year to April 2023. Yet, as ISP Review wrote:

the move is not unexpected. The operator is known to have been trying to cut costs and are also hoping to benefit from the efficiencies that are likely to flow from their network upgrade projects.

Moreover, the redundancies are coming after the company paid £1.6bn to shareholders in 2022. It also made £3.9bn in core operating profit (before taxes and depreciation). However, such is corporate capitalist life – and Virgin Media O2 has a staggering £19bn of debt and “lease obligations” on its books.

So, if you’re a boss who’s making money – but also owes even more money to other people – then the first rule of Capitalism 101 is ‘get rid of the plebs’ to save £350m. Which is exactly what Virgin Media O2 has done.

Lesson learned for the CWU, you’d think? Possibly not.

CWU: a bit of a mess, really

First, the union knew in at least February that some redundancies were coming. It said in a statement early in 2023 that:

Detailed talks are underway… on behalf of 1,357 employees who’ve been placed ‘at risk’ of potential redundancy as a result of a massive site rationalisation and restructuring exercise.

Yet, it failed to act on this during its negotiations over pay with Virgin Media O2. Secondly, the union’s most recent weak response to the redundancies is simply not good enough. Saying that it will try and “mitigate” the redundancies, and “work” with Virgin Media O2 over them is flaccid. Given the shareholder dividends and core operating profit last year, the CWU should be balloting for strikes over this.

However, this disaster for workers has ramifications elsewhere.

The CWU’s now-ended industrial dispute with Royal Mail is a case in point. The union and 50% of its members recently voted ‘yes’ to a deal. However, it was hardly a good one – for example, with just a 10% pay rise across three years (not even touching the sides of inflation and rising prices) plus some worsening of working conditions. Many members accused the CWU of effectively selling out:

It's not really 10% pay rise is it though, 2% was enforced before any of this started, it's 8%
£500 after tax and ni will be around £380

Good luck selling this one… think this could spell the end of the cwu, I hope I'm wrong, but £150 a year and that's what we're offered…

— P-AFC (@AfcWadz) April 21, 2023

Stop dancing with the devil you fools

But with Royal Mail’s unenviable position of being one of the most notorious corporate capitalist entities in the UK, who’s to say that it won’t impose cost-cutting exercises on its workers anyway – in spite of the CWU deal? Parts of the agreement are dubiously phrased (no “compulsory” redundancies until April 2025, ‘learning and honing’ on changes to people’s hours). Moreover, last September Royal Mail was perfectly willing to ‘rip up’ the previous one, agreed in 2013.

The situation with Virgin Media O2 should be a warning to the CWU: never dance with the capitalist devil. Except it’s probably too late, as the rumba with Royal Mail reached its choreographed denouement weeks ago. Now, we wait and see if the devil bosses have an encore up their sleeves for workers. If it’s the case, the CWU will have serious questions to answer – which it already has plenty of about the situation with toxic Virgin Media O2.

Featured image via O2 – YouTube