Royal Mail’s catastrophic financial free fall leaves the CWU in a difficult position

The Royal Mail logo as Royal Fail CWU IDS
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As predicted, beleaguered Royal Mail made huge losses during the last financial year. It’s hardly a surprise, given what the Communication Workers Union (CWU) previously called bosses’ “gross mismanagement” of the company. However, Royal Mail’s financial catastrophe throws into question the deal it offered the CWU over its ongoing industrial action.

Royal Mail: financial free-falling

As Sky News reported, Royal Mail made an operating loss (before tax paid is taken off) of over £1bn in the 52 weeks from March 2022 to 26 March 2023. That is, the company’s finances fell off a cliff edge. The previous year it made a £250m operating profit. However, these figures aren’t quite what they seem.

First, and when Royal Mail took off things like tax, the loss was reduced to £419m. Meanwhile, its parent company International Distributions Services (IDS) made an overall loss of £71m, when it adjusted for other subsidiaries’ revenue, and tax.

However, a £1bn operating loss means that bosses’ management of the company was a shambles. This won’t come as a surprise to anyone who’s been following the dispute between the CWU and Royal Mail. The company has lurched from self-induced crisis to self-induced crisis.

From its (now former) CEO Simon Thompson lying to a parliamentary committee, to him and his cronies threatening to declare Royal Mail insolvent if the CWU didn’t bow down to their demands, the past 12 months at the company have been a farce. Not that IDS recognises any of this – because if in doubt, blame the workers, all while giving Thompson a £300k package upon his departure.

CWU: the Armageddon came to pass

The Guardian reported that IDS’s chairman said:

Quality of service has been significantly affected by industrial action and high levels of absence.

Read on...

The CWU would probably disagree – not least because IDS’s chairman failed to mention the massive cyberattack on Royal Mail. Moreover, the company has consistently shown that it thinks very little of its staff – from forced-through changes to how they work to redundancy threats to tracking how fast employees are working. None of this is conducive to a properly functioning business, so much so that the CWU and its members have been forced to repeatedly hold strikes.

As CWU general secretary Dave Ward previously said of an offer to staff from Royal Mail last year:

These proposals spell the end of Royal Mail as we know it, and its degradation from a national institution into an unreliable, Uber-style gig economy company.

Make no mistake about it: British postal workers are facing an Armageddon moment.

Since then, not much has really changed.

The future of Royal Mail: bleak, at best

Currently, Royal Mail and the CWU have agreed on a deal over the ongoing dispute. It includes a 10% pay increase over three years for workers. However, as the Canary previously reported, this isn’t exactly a win:

The problem is, the CWU is framing this as ‘well, Royal Mail wanted to do something terrible – but we’ve stopped it doing that’. In reality, all the union has achieved is to make something a little less worse: hardly a resounding victory.

Moreover, many workers are fuming over the deal. Now, and after Royal Mail’s massive losses announcement, parent company IDS is already eyeing up changes. It said that to offset the losses, it would be:

continuing to drive efficiency and change, improve quality of service and competitiveness, and reduce cost and environmental impact. Cumulative pay increases for next two years funded by operational change efficiencies.

‘Efficiencies’ usually means cuts to workers’ pay, worse working conditions, or even redundancies. While Royal Mail and the CWU’s deal is fairly clear-cut in terms of what the company will do, this doesn’t mean that it won’t introduce further changes to working conditions down the line – ones that it hasn’t agreed with the CWU.

What next for the CWU?

So, with Royal Mail on the rocks and its deal with the CWU already facing the wrath of workers, where next for the union? It said in a statement:

There is no doubt that Royal Mail faces a very serious financial situation. It is one of its own making due to gross mismanagement, but it is serious nonetheless. We now need to see actions rather than words.

The toxic environment created by a senior management team that has gone to war with its own workforce needs to end immediately. In recent weeks, there has been no let up on the culture of imposition, disregard for quality of service and the destruction of the service to the public.

Royal Mail is at a crossroads. It cannot and will not survive without taking the workforce with it through this period.

With regards to the deal between the CWU and Royal Mail, if members reject it, on the one hand the union’s now got a pretty good advantage in terms of bargaining with bosses. The state of Royal Mail’s finances means the company needs its workers on side.

However, this is capitalism we’re talking about. Bosses had already threatened to declare Royal Mail insolvent. If push comes to shove, corporate capitalists will always save their own skin (and bank balances) at the expense of workers. The point being, the company and its workers’ futures are now even more uncertain.

The bigger question for the CWU and its members is: do they now fight back harder against bosses – or accept the lukewarm offer they have in return for saving the company? Only the workers can, and should, answer that question.

Featured image via the Times and the Sunday Times – YouTube

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