Difficult delivery: industrial relations in the postal service
In the first of an occasional series on industrial relations in major UK industries we turn the spotlight on the Royal Mail to ask why postal services have been such a hotbed of militancy in recent years.
The Royal Mail Group has a near complete monopoly on postal delivery, and since the Royal Mail (RM) division accounts for three-quarters of the group's employees, the sector's industrial relations are largely the story of RM and its principal recognised union, the Communication Workers Union (CWU).
Relations between these two organisations have hit the headlines because they have been so spectacularly bad throughout some 20 years of politically enforced quiescence in the union movement. From the mid-1990s in particular, CWU members in RM have accounted for more strike action than any other sectoral group.
National strikes are the exception; the table on p.16 shows the effects in working days lost of the only two national stoppages in the past 20 years in 1988 and 1996 - the latter was one of the biggest disputes of the 1990s. But the sheer number of official and unofficial local strikes, that averaged 144 a year over the 18 years to 2000/01 and peaked at 355 that year, has contributed as much as 50% of all days lost to action in the UK. Why are the postal workers so strike prone?
The source of strength
Dr Gregor Gall, reader in industrial relations at the University of Stirling, recently published a study of industrial relations in the postal industry1. He says that, although there are regional pockets of true militancy in the CWU, for example in London, Edinburgh and Liverpool, the union's national executive has been largely politically moderate, even conservative. The high levels of industrial action in the sector over the past two decades are down to a more complex combination of factors.
The most important factor is the nature and structure of the industry: it was a monopoly by law, and probably will continue to be so in the future because of the prohibitive expense of replicating the delivery network. Postal workers gain power from the fact that much of the mail cannot be readily substituted, and other businesses are dependent on it and will quickly bring pressure on RM for an end to any strike action.
All stages of the collection, sorting and delivery chain are also mutually interdependent; withdrawal of labour at any one stage stops the entire service.
The other main sources of perceived strength stem from the union's history and organisation. Very high levels of membership - the CWU claims 90% membership among eligible RM grades - and strong workplace organisation are reinforced by a strong facilities agreement. Furthermore, the combination of national negotiation and workplace bargaining, plus a tradition of local autonomy means the branches do not always follow the central line.
"There is lots of unofficial action because, locally, they cannot influence the central organisation that has negotiated unambitious compromise agreements," says Gall.
This inability on the part of grassroots members to influence central policy comes from a tradition of offices and divisions working in isolation, he says, so they "cannot organise horizontally to put pressure vertically".
The CWU and its predecessors, alone among unions in large nationalised or formerly nationalised industries, kept its industrial power and remained unbowed through more than one-and-a-half decades of Conservative governments and a Labour administration keen to distance itself from strong unionism. "The union has been able to slow the pace of change, though not reverse it," says Gall. "That contrasts with the other former nationalised industries, where unions had much less success."
This mixture of national strength and local ability to knock back unpalatable centrally negotiated agreements means that the industrial relations machinery set up in 1992 under the New Industrial Relations Framework Agreement (NIRFA) has been used by the union to block management initiatives commonplace in other industries, such as teamworking, teambriefings and total quality management (TQM).
NIRFA provides for regular meetings between senior RM managers and CWU executive council members in a national joint negotiation committee (NJNC) covering pay and conditions, and interpreting and changing national agreements. National bargaining is supplemented by workplace negotiation below branch level. Talks are subject to a three-stage procedure for resolving disagreements that, importantly, can be exhausted and can lead to dispute without reference to national officials.
Meanwhile, RM provides salary deductions of union subscriptions, paid time off and office facilities for local CWU representatives throughout the country. It even pays for the communications costs of divisional reps.
2001 and after
Industrial relations in the RM from 2001 to date need to be considered separately from the decades before because the scale of change during that period altered the industrial landscape.
Though the Royal Mail Group's core mails business has maintained healthy, growing profitability, static stamp prices, rising costs and special provisions - such as a failed £1-billion investment in Horizon, a new computer system for post office branches - helped put it heavily in the red. By February 2002, the group claimed it was losing up to £1.7 million a day.
This led to a series of radical proposals by RM management, some of which were abandoned - such as selling off Parcelforce Worldwide - while others were eventually conceded by the CWU, such as re-engaging Parcelforce drivers as self-employed contractors.
To address the financial crisis, RM produced a three-year strategic plan in 2002 that included taking a £3billion loan from its shareholder, the Department of Trade and Industry, cutting the workforce by 30,000 and increasing productivity by ending the second daily postal delivery.
The formation of PostComm following the Postal Services Act 2000 has also led to new pressures. The regulator is pressing for faster access by private firms to RM's protected markets than is required under EU law, and has already granted limited licences to firms including Business Post, Deutsche Post, Hays Commercial Services and the Dutch post office TPG.
Meanwhile, there have been changes of key personnel at the top echelons of the RM and CWU. At the Royal Mail Group, Allan Leighton - credited with building up retail giant Asda - was brought in by the government as chair, and Adam Crozier arrived as chief executive in 2003. The group also appointed its first human resources director, Tony McCarthy, from BAe Systems.
At the CWU, the election of left-leaning general secretary Billy Hayes and deputy general secretary (postal) Dave Ward has led paradoxically to less emphasis on industrial action and union acquiescence in the introduction of private competition. The CWU leadership has turned to lobbying government for the protection of the Post Office as a public service.
The Sawyer Report
Following major unofficial strikes in Belfast, Cardiff, London, Liverpool, Oxford and parts of Scotland in 2000 and early 2001, the CWU and Consignia - as the Royal Mail Group was then named - approached Lord Sawyer, a former Labour Party general secretary and deputy general secretary of the public services union Unison, to head an independent review of their industrial relations.
The review group reported in June 2001, criticising the "frankly dire" state of industrial relations in many Royal Mail workplaces, and citing a mutual lack of trust between management and union representatives. The report laid responsibility for ending a strike culture primarily at the door of the union, since "it is the union and its officials and representatives who call all official action and bring about most unofficial action". But it also recognised the role of "high-handed or insensitive management behaviour" in promoting strife.
The report's main recommendations were:
for RM and the CWU to agree a strike-free period as a breathing space for structural changes to be made;
the creation of "partnership boards" at national and local level, charged with the specific job of developing partnership working throughout the business;
that RM and the CWU find ways of developing and improving joint employee communications;
that RM improve management training methods and procedures, concentrating on good leadership skills; and
that the CWU look at measures, including disciplinary measures, to enforce the authority of its executive and national officials over branches or members who break union rules.
The most immediate result of the report was a month-long moratorium on industrial action agreed by the CWU and RM for August 2001, which was then extended to cover September. This was followed by a three-month agreement taking the ceasefire period to mid-January 2002.
Even after the end of the official moratoria, CWU leaders continued to pressure regional and local officials - as the Sawyer Report recommended - to avoid strike activity. The result was a sharp fall in working days lost through strikes, from 111,792 in the 15 months before the publication of the report to 9,587 in the 15 months after the moratorium was agreed.
Partnership boards were also set up, first nationally with RM senior managers and CWU national officials, then in Scotland and the East Midlands, with more intended across the country. Joint working parties were convened to discuss Sawyer's other recommendations.
But in November 2001, the CWU suspended its involvement in the partnership initiative, citing a unilateral announcement by RM that it would introduce a new employee share scheme - which the union saw as divisive - and subsequently heavy-handed implementation of new attendance procedures. The CWU argued that RM's actions showed it was not committed to meaningful partnership.
Gregor Gall notes, however, that between July 2001 and March 2003 the union issued 21 national strike warnings - though these led to ballots in only three cases -most of them during and after the moratoria.
With hindsight, it seems that the pace and volume of structural change in the period after Sawyer was too great for the fledgling partnership structure to cope with, and both sides reverted to tradition: imposition on one side and threats of action on the other.
The 2003 strikes
In September 2003, the CWU balloted its members on strike action over the national pay and conditions deal proposed by RM after talks at the conciliation service Acas broke down.
RM's "final" offer included a pay rise of 14.5% over 18 months, increased London weighting and the extension of supplements in hard-to-recruit areas. The offer was linked to nationwide acceptance of the end of the second delivery and the 30,000 job cuts originally set out in the 2002 recovery plan.
In a surprise to the leadership, CWU members voted against action by a margin of just 1% on a 68% turnout. Senior managers at RM initially clearly expected to be able to push through their previous offer. But in regions where there had been a majority in favour of national action, the frustration of CWU members at the "no" vote showed itself in strike action that was ostensibly linked to other issues.
An official strike began in London in October after a near-unanimous vote in favour (on a turnout of more than two-thirds) over a claim for a £4,000 capital allowance to replace the existing inner and outer London weighting payments.
Unofficial action subsequently flared after the suspension of a driver in London, and spread sporadically to counties including Berkshire, Essex, and Kent, as well as cities in the Midlands. At one point, the action involved an estimated 28,000 workers in London and the South East.
Gall says that, although the CWU's national officials could not officially condone the walkouts in the regions, the strikes helped restore their bargaining hand after the September "no" vote. "Much of the heat around that issue was taken away by the unofficial strikes that followed," he says. "So the relative advance that Royal Mail had made - they were saying 'the world has now changed, you'll sign up to what we want you to' - was taken away."
The strike was called off at the start of November after lengthy negotiations between the CWU and RM led to a commitment to further talks on the 2003 deal. More negotiations produced an agreement on pay and conditions in late December.
Subject to acceptance by CWU members, the agreement commits the union and RM to a single, daily delivery for all town residential postal routes by the end of March 2004 in return for a 4.5% staged increase by April 2004, plus extra increases worth £26.28 a week (taking basic pay to £300 a week).
On industrial relations, the agreement commits both sides to replacing NIRFA with a new framework and structure by April 2004.
Jeremy Baugh, head of research at the CWU, says that RM has not given the union a clear indication of what it wants from a new framework. Gregor Gall believes it is likely that RM will be looking to push the CWU to abandon its divisional structure and closely match the RM's territorial organisation, weakening along the way the regional power bases that have enabled so much local action in the past.
Things to come
Whatever the shape of the proposed new industrial relations framework, there is much scar tissue from recent events to heal before any kind of normality can be achieved. And this is not just true of the CWU. RM's December 2003 announcement of 3,000 managerial job cuts was described by Amicus-CMA general secretary Peter Skyte as "a kick in the teeth" after managers' efforts to maintain service continuity during the October strikes by CWU members.
The CWU's Jeremy Baugh sounds a cautiously optimistic note, saying that the new agreement provides a basis for more constructive industrial relations and for dealing with all aspects of major change across the business. He also points out that management and the unions still have common cause in moderating PostComm's enthusiasm for rapid privatisation, and notes that the partnership structures set up after the Sawyer report, though somewhat overtaken by events, were never formally dissolved and could still be made to work.
Gregor Gall is less sanguine, observing that the recurring "left-hand, right-hand problem" of the centre and the regions following different paths may still stand in the way of a more cooperative industrial relations climate. Nor is this problem restricted to the CWU, he says. "Allan Leighton has a different style, but that only percolates so far down. You have the remnants of a traditional system locally, where there is a barrack-room style among managers. So far, Royal Mail has cut the number of managers rather than deal with the way they act."
In the longer term, Gall says the future for postal workers as a coherent and powerful industrial group will depend on how much incoming private competition is reliant on RM staff to cover the "last mile" to home and business addresses. "If the competitors use the Royal Mail network, then the workers will realise that they still can influence things, because people will be dependent on them."
1. The meaning of militancy? Postal workers and industrial relations, by Gregor Gall, Ashgate Publishing, 2003, available from www.ashgate.com, £57.
This article was written by Louis Wustemann, a writer and consultant on employment issues, lw@sivill.demon.co.uk.
Our series on industrial relations in key industries continues in issue 795 with a look at the financial services sector.
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Royal Mail Group The Royal Mail Group is a government-owned public liability company. It is divided into three main businesses: Parcelforce Worldwide, the Post Office (formerly Post Office Counters) and Royal Mail (RM). The group employs over 200,000 people, more than 160,000 of them working in RM at 84 main regional processing offices and 1,500 delivery centres. RM collects, sorts and delivers UK mail, and generates around 80% of group revenue. It has a monopoly on post weighing 100 grammes or less, though this is being phased out in line with the EU postal services Directive. The Royal Mail Group is regulated by the Postal Service Commission (PostComm) under the Postal Services Act 2000. Communications Workers Union (CWU) The CWU was formed in 1995 by a merger of the Union of Communication Workers and the National Communications Union. Almost two-thirds of its 300,000 members work for the Royal Mail Group, and most of these are in RM, where the union is recognised for non-managerial grades. The union's annually elected national executive council is responsible for central policy making. Postal members are grouped into 95 large regional branches. Communications Managers Association (CMA) The CMA is the recognised union for around 14,000 managerial
posts in the Royal Mail Group. Since 1998, the CMA has been an autonomous
section of the Amicus general union. |
Royal Mail strike activity 1983-2003
|
YEAR |
WORKING DAYS LOST |
|
1983/4* |
10,200 |
|
1984/85 |
90,000 |
|
1985/86 |
74,000 |
|
1986/87 |
50,000 |
|
1987/88 |
64,000 |
|
1988/89 |
1,100,000 |
|
1989/90 |
30,000 |
|
1990/91 |
18,750 |
|
1991/92 |
12,500 |
|
1992/93 |
37,500 |
|
1993/94 |
17,500 |
|
1994/95 |
42,000 |
|
1995/96 |
63,000 |
|
1996/97 |
811,000 |
|
1997/98 |
50,000 |
|
1998/99 |
16,000 |
|
1999/2000 |
22,000 |
|
2000/01 |
66,000 |
|
2001/02 |
53,000 |
|
2002/03 |
7,400 |
*May-April.
Source: Gregor Gall.
