UK braced for Christmas post chaos as union rejects 'final' pay offer

By Yadarisa Shabong and Pushkala Aripaka

(Reuters) -Strikes by British postal workers in the run up to Christmas look set to go ahead after Royal Mail's largest labour union rejected the latest pay offer from the company on Wednesday.

The post and parcel company said it would increase wages by up to 9% over 18 months, instead of the previously planned two years, in its "best and final" offer, as it urged workers to call off strikes.

However, the Communication Workers Union (CWU) said industrial action planned for Thursday and Friday - Thanksgiving and Black Friday, respectively - would go ahead after talks ended badly.

It is expected to make a decision on further stoppages planned in the run up to the holiday season later in the day.

The long-running dispute is one of many raging across Europe as workers and businesses alike grapple with soaring inflation, which hit a 41 year-high of 11.1% in Britain last month.

Shares of Royal Mail's parent company, International Distributions Services, fell as much as 6% in afternoon trading following the setback to its UK business.

The CWU has held multiple strike days in the past few months and drawn up plans for another 10 days of stoppages between Nov. 24 and Dec. 24.

Royal Mail has warned further strikes do not bode well for the company.

"In a materially loss making company, with every additional day of strike action we are facing the difficult choice of about whether we spend our money on pay and protecting jobs, or on the cost of strikes," CEO Simon Thompson said in a statement.

Relations between the company and the CWU have been strained in the past few years.

Several Royal Mail delivery offices on Tuesday backed no confidence votes in Thompson, who effectively replaced former CEO Rico Back who had proposed Royal Mail's "transformation plan" that set off the friction between the two sides.

"We are disappointed that instead of reaching a compromise to avoid major disruption, Royal Mail have chosen to pursue such an aggressive strategy," CWU General Secretary Dave Ward said following Royal Mail's latest offer.

"We will not accept that 115,000 Royal Mail workers ... take such a devastating blow to their livelihoods."

Last month, the union rejected an offer that included a 7% salary increase over two years, plus a lump sum payment of 2% of pay this year, alongside other changes it called "unacceptable".

Royal Mail said its latest offer would make Sunday working optional, include "more generous" voluntary redundancy terms than originally proposed, and also committed to no compulsory layoffs until the end of March.

The company had warned last month of thousands of job cuts as it slid into the red.

(Additional reporting by Aby Jose Koilparambil, Amna Karimi and Radhika Anilkumar in Bengaluru; Editing by Anil D'Silva and Mark Potter)