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Royal Mail losing £1m a day as strike looms amid pay and jobs row

·Finance Reporter, Yahoo Finance UK
·2-min read
A Royal Mail delivery man looks at a
More than 115,000 postal workers at Royal Mail have voted to strike over pay. Photo: Toby Melville/Reuters

Royal Mail Group (RMG.L) said its flagship postal service was losing £1m a day as postal workers have voted to strike over pay.

In what could be the biggest industrial action to hit the UK this summer, 115,000 postal workers voted in favour of strikes over pay and work conditions. The ballot saw 97.6% votes in favour of taking action on a 77% turnout.

"The vote can leave no doubt that postal workers are united, and that they are demanding the proper pay rise they deserve," the Communication Workers Union (CWU) said.

Read more: UK economic growth downgraded but set to narrowly avoid recession

No strike dates were announced in response to the ballot, allowing more time for a negotiated settlement.

The CWU demanded Royal Mail enter talks to agree a "straight, no-strings" pay rise.

Royal Mail had offered a pay rise of 5.5% for CWU-grade workers, which it described as its biggest increase in years.

The threat of a strike comes as the postal provider is poised to separate GLS and Royal Mail unless UK operations improve.

Royal Mail Group said its flagship postal service was losing £1m a day today as revenues across the group dropped 5.1% in the first quarter of the year as the pandemic postal boom fades.

“The pandemic boom in parcel volumes bolstered by the delivery of test kits and parcels is over,” said Keith Williams, chair of Royal Mail Group.

“Royal Mail is currently losing one million pounds per day and the efficiency improvements which are needed for long term success have stalled.”

The postal provider warned that the board would consider the separation of its two brands – GLS and Royal Mail – if “significant operational change” in its UK operations was not achieved.

Read more: UK workers suffer record drop in real terms pay

The FTSE 250 company has become increasingly reliant on GLS for returns, which saw a 7.5% jump in revenues to £1.12bn.

“Whilst GLS delivered a solid performance in the first quarter, the performance of Royal Mail was disappointing,” Williams said.

The group said it would change of its holding company to International Distributions Services to reflect the importance of GLS.

The Royal Mail division is its UK-focused one, delivering letters and parcels, and includes Parcelforce Worldwide. GLS is its international operation, based in the Netherlands and working across the US, Canada and Europe.

Watch: Postal strike looms as Royal Mail workers back walkouts in pay and jobs row