Royal Mail Group (LON:RMG) is facing its first strike since its privatisation, as a union voted in favour of industrial action. The postal operator nevertheless noted that it was committed to further talks with workers.
Royal Mail’s share price closed little changed in London yesterday, adding 0.29 percent to 384.20p, largely in line with gains in the mid-cap FTSE 250 index which ended the session 0.39 percent higher at 20,035.35 points. The group’s shares have lost more than 21 percent of their value over the past year, and are down by some 16 percent in the year-to-date.
The Communication Workers Union (CWU) announced in a statement yesterday that 89.1 percent of voters had backed strike action, with 73 percent of the CWU’s 110,000 Royal Mail members participating in the vote. The move came after the privatised postal operator unveiled plans to scrap its defined benefits pension plan and replace it with an alternative, less costly scheme.
“This ballot result is hugely significant and demonstrates a strength of feeling that can only be translated as a massive vote of no confidence in the managerial leadership of the Royal Mail Group and the direction that they advocate,” the union’s deputy general secretary (postal) Terry Pullinger said in the statement.
Royal Mail said in a separate statement that it was ‘very disappointed’ by the vote and that it was “committed to further talks as a matter of urgency, to reach agreement with the CWU,” insisting that there were “no grounds for industrial action”.
The Telegraph meanwhile noted in its coverage of the news that Royal Mail workers were planning to hold an initial two-day strike on November 24 and 25, which will coincide with the Black Friday holiday, widely acknowledged as the start of the Christmas shopping period.
Analysts at Jefferies reiterated their ‘underperform’ recommendation on Royal Mail following the vote. Citywire quoted the broker’s analyst David Kerstens as explaining that the postal operator’s shares were trading at a 15-percent discount to the European postal sector but that “there remains downside risk in the labour negotiations about pay and pensions”.