Workers at Royal Mail have voted for strike action as the dispute over its defined benefit pension scheme rumbles on.
In a landmark vote, the first major one to take place since the Trade Union Act came into force in March – requiring more than 50% of eligible union members to vote in a ballot – 73.7% of the Communication Workers Union’s (CWU) 110,000 Royal Mail workers turned out to vote, with 89% (72,872) backing a walkout and 8,954 voting against.
In a CWU press conference yesterday (3 October) in Manchester, general secretary Dave Ward said the result was demonstrative that Royal Mail’s leadership, board and senior management are “completely out of touch with the workforce”.
“We say to Royal Mail these negotiations that subsequently led us to this point of balloting have been going on for 18 months and unless you shift your position sufficiently and very quickly then industrial action is inevitable.
“When Royal Mail was privatised around four years ago our members were given free shares. What this result means to the company is that as workers and as shareholders, postal workers have completely rejected the direction that the company is going in and have completely rejected messages to try and urge all our members to vote against our union.”
Unite’s Royal Mail officer Brian Scott distanced his union, which represents around 6,500 Royal Mail managers, from the decision.
“It’s fair to say we are not in dispute with the employer at the minute,” Scott told PrintWeek.
“Members albeit narrowly have rejected the company’s pension position and we want the company to respond with a better offer.
“Of course, should the CWU legitimately take strike action then our members will face some challenges but we have made it clear to the employer that we expect them not to abuse our members in the workplace, they should do what they are contracted to do, that will be our advice to them.”
Chris Combemale, chief executive of the Direct Marketing Association (DMA), described the decision as “concerning” in the wake of Brexit negotiations and the challenge of the General Data Protection Regulation (GDPR) implementation.
“We urge both parties to resume negotiations urgently and settle their differences, to avoid disruption to the Christmas sales season, which is critical to the UK's retailers,” said Combemale.
Threats for strike action were first made when Royal Mail announced in April that it would be closing its £7.4bn defined benefit pension scheme to accrual in March 2018. Royal Mail said it had reviewed consultation feedback from members and unions and that the plan, which is in surplus at £1.77bn, would run out in 2018.
The company’s annual pension contributions were said to be at £400m and if no changes were made, the contribution could more than double to over £1bn by 2018.
An improved proposal was made in July but was comprehensively rejected by the CWU, with its deputy general secretary Terry Pullinger (postal) saying at the time that the proposal did not “meet our aspiration of a wage in retirement pension scheme”.
A spokesperson for Royal Mail said that there were no grounds for industrial action and that it remained committed to reaching an agreement with the CWU on pay and pensions.
The spokesperson said: “Alongside Royal Mail’s proposal for the best pension scheme in the industry – and one that compares favourably to other large employers – we are making a very good offer on pay.
"Under its proposals, Royal Mail would continue to provide the best pay and terms and conditions in the industry. Many competitors pay around the National Living Wage. Royal Mail pays 45%-50% more than this.”
Royal Mail said that under the proposed new scheme, someone aged 50 earning £25,000 a year and retiring at 65 would retire on an annual pension of £12,300 and a tax-free lump sum of £81,800, comparing to the UK’s average occupational scheme of £8,112 per year.
Scheme members would also receive a state pension, meaning a total retirement income of up to £20,596.60 per year.
Lance Hill, who recently left Royal Mail’s MarketReach operation to join The Lettershop Group as sales director, described the decision from the CWU as “short-sighted”.
“The reality is that the pension scheme they’ve currently got is not sustainable, it doesn’t add up,” he said.
“Whilst I accept it’s difficult for the members, the package they [Royal Mail] are offering is incredibly competitive and far better than what their competitors offer.
“The issue is that it makes marketeers think about using other channels. If they see direct mail has a risk in terms of delivery then it puts a question mark over marketeers. At a time when lots of good things are coming on – direct mail is having a bit of a renaissance in many parts – this is bad timing."
The CWU previously threatened strikes in 2013 during a long-running dispute over issues including pay, pensions and the impact of privatisation on job security and conditions, with the dispute settled in early 2014 after the CWU supported Royal Mail’s agreement.