Corporate Reforms

There are, of course, immediate concerns behind today’s strike vote – job security, attacks on pay and conditions as well as a culture of bullying have led to a remarkable series of walkouts, averaging more than one per week, in Royal Mail depots across Britain.

But underlying these grievances is the decision by the company’s new CEO and his team to renege on Royal Mail’s commitments to the CWU last year. Under the previous CEO, it had signed up to the ‘four pillars agreement,’ which secured terms on pay and pensions, as well as a “flight path” to a reduced working week.

The agreement did more than that, though. It also guaranteed Royal Mail’s workers input in the future direction of the company as it transitioned from operating in an industry built around letter delivery to one in which parcels and packages were dominant. And it pledged to uphold Royal Mail’s Universal Service Obligation – which underpins its role as a public service that is committed to operating in all parts of Britain, not just those it cherrypicks on the basis of profitability.

When Rico Back was appointed CEO – with a massive and controversial £6 million ‘golden hello’ – it was a signal that Royal Mail intended to move away from this agreed framework. Back had previously been in charge of Royal Mail’s European parcel business GLS, where he had overseen a radically different organisational culture, more similar to gig economy companies like Deliveroo or Uber, or internet giant Amazon, than to a five-century-old public institution like Royal Mail.

When Royal Mail was privatised beginning in 2012, the union had feared this was the path it would eventually go down. At first, the CWU managed to hold off the worst effects of privatisation with a landmark deal that banned zero hour contracts, prevented the institutionalisation of a two-tier workforce and introduced controls on the use of temporary labour. But, gradually, the private management has moved to erode these guarantees.

More recently, it began a process of separating out, then dividing up and, beginning this October with Parcelforce, selling off parts of Royal Mail. This, combined with its determination not to engage seriously with the union about the future direction, meant postal workers were, in the CWU’s Terry Pollinger’s words, “in the fight of our lives”.

The Privatisation Agenda

The result of Royal Mail’s reform agenda for workers is clear – a company that follows the trend set by Amazon in preparing parcels and gig economy companies reliant on agency workers in delivering them.

To some extent this is already underway with Royal Mail’s purchase of eCourier, which relies on agency work and classes the majority of its workforce as ‘independent contractors‘ in ways reminiscent of bogus self-employment practices elsewhere in the gig economy. As is almost always the case with privatised businesses, these poor conditions for workers contrast with massive payouts for corporate executives – with eCourier’s boss paid £134,000 last year.

Royal Mail CEO Rico Back himself receives an eye-watering £2.7 million paypacket, and has established a similarly expensive corporate team to oversee his reforms. One of those brought in was management consultant Donald Muir, who was given the ominous title of Transformation Director. In his previous incarnation as an executive as Global Titanium Solutions, Muir had charged the NHS £935,000 in a single year for expertise on pro-market reforms – a practice which led to these advisory firms being compared to “racketeers”.

Of course, the path for all of this was established with Royal Mail’s original privatisation – one of the most scandalous government decisions of the past decade. By contrast to the usual rationale for privatisations – a ‘failing’ public company draining national resources – Royal Mail was actually making a profit of up to £400 million when it was sold off.

But this wasn’t even the most incredible aspect of the sale. Revelations in 2014, a year after it was sold, revealed that investment bankers brought in by the government to value Royal Mail before privatisation has estimated its value at £1.5 billion above the price it was eventually sold for. A 500-year-old public asset had been given away in a sweetheart deal.

Soon afterwards, the culture of corporate splurging began, with Royal Mail’s first private CEO Moya Greene earning over a million pounds a year – and a £2.6 million “golden handshake” upon departing. Meanwhile, cost-cutting and payouts to shareholders led to service decline and the company’s new, much-touted private management failed to come up with adequate plans to deal with the transition from letter to parcel delivery.

A Civic Infrastructure

The growing concern about Royal Mail’s future under its private management has led to share prices falling, and precipitated the arrival of Rico Back in 2018. But is his race to the bottom approach really the solution to the company’s problems?

Certainly, for the public, the direction of travel is concerning. Since his arrival as CEO Rico Back has refused to defend the Universal Service Obligation – which Royal Mail itself describes as the guarantee of “the six-day a week, one price goes anywhere postal service… to 30 million UK addresses.”

If this universal provision was to be scaled down, millions of people across Britain could find postal services much harder and more expensive to access than at any time in recent memory.

It would also be the end of the Royal Mail, and its postal workers, as a civic infrastructure. The postie is not just a delivery worker – but a part of communities across the country. Many people know them by name, and many especially older people rely on their daily visits for human contact. They don’t just deliver post – they save pensioners from house fires, answer their cries for help when they are injured, and even save them from drowning.

In a time when so many feel isolated, removing the neighbourhood postie would be tearing yet another hole in Britain’s social fabric. And it doesn’t have to be this way – in France, this part of a postie’s job is formalised into something called ‘veiller sur mes parents‘ or ‘keep an eye on my parents’. Under this system, postal workers agree to check in with pensioners on their rounds and send messages to let their loved ones know they are alright.

That reform to La Poste only came about because workers pressured management to adjust to the new environment with innovation rather than cost-cutting and attempts to compete with gig economy employers. Royal Mail’s workers want the same – a say in the direction the company pursues while it deals with challenges they see more clearly than any executive. But, under Rico Back’s leadership, the company has decided to shut them out.

That, beyond the immediate grievances, is what today’s strike ballot from the CWU is about – demonstrating to Royal Mail the incredible unity of feeling among workers that agreements should be respected, pay and conditions protected, and their union involved in deciding the future of postal services in Britain.

If the workers win this battle, it will be a victory for the company’s public service ethos – and, hopefully, in the longer term, a step towards renationalisation. If they lose, the coming decades will in all likelihood be ones characterised by low-paid, insecure workers providing a substandard service to fewer and fewer people. All while corporate executives reap the benefits of a company built up by generations of British taxpayer money.

Those are the stakes. It’s time to stand by your postie.