Royal Mail counts £200m cost of industrial action but scales back redundancy plans

Strike action among staff at Royal Mail over pay and conditions has so far cost the business £200m, according to its owner.

However, in a trading update it also said that the number of voluntary redundancies it needed to hit its targets would be “significantly lower” than the 5,000-6,000 it previously forecast, due a strong performance in reducing resource and staff turnover.

For the nine months to the end of December 2022, Royal Mail owner International Distribution Services said revenues were down 12.8% and this was because of a structural decline in letters, weaker retail trends and the impact of industrial disruption, which included 18 strike days in the year to date.

It reported an operating loss of £295m and the net cost of strike action during the period was estimated at around £200m.

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The dispute with the communication workers union (CWU) has been going on since the summer and this week the union began its third ballot for industrial action.

In a webinar involving the CWU general secretary Dave Ward and Royal Mail investors, the business was accused of turning away from modernisation and “infrastructure-reducing”, including a proposal to abandon the AM delivery period.

“They’re putting all their eggs in one basket in seeking to become parcels only and looking to shrink the company’s infrastructure,” said Ward.

“Once Royal Mail abandons what is currently its ‘sweet spot’, then competitors will move in on that slot.”