iNVEZZ.com, Monday, October 14th: Postal workers at Royal Mail (LON:RMG) will this week decide on a series of nationwide strikes, which could see thousands of staff walk out later this month.
The Royal Mail share price on Friday jumped by more than a third above the Government’s set price of 330p a share after the start of the conditional dealings on the London Stock Exchange. It closed up 38 percent at 455p, valuing the company at £4.55 billion
(Royal Mail’s share price surges 38% on market debut).
After the strong market debut, the postal service staff is sitting on a windfall worth almost half a billion pounds, but workers are still expected to vote for strike action over pay and labour conditions. Billy Hayes, general secretary of the Communication Workers Union (CWU), yesterday said, as quoted by the Guardian: "Shares will make no scintilla of difference to postal workers who are far more concerned about their jobs. We expect our members will vote to protect their terms and conditions in our strike ballot next week.”
Royal Mail insists that its offer of an 8.6 percent pay rise over three years is sufficient but unions want further concessions. The CWU, which represents more than 100,000 postal staff, had wanted to hold the strike before the privatisation but the government started the sell-off sooner than expected. More than 95 percent of Royal Mail staff were opposed to the privatisation in a consultative ballot earlier this year.
In an attempt to placate workers the government granted employees 10 percent of Royal Mail's shares for free. The postal service’s 150,000 workers were handed £2,200 worth of free shares, handing them at least an £800 instant paper profit on the first day of trading. Thousands of Royal Mail employees are sitting on even greater gains because all staff applications to buy up to £10,000 of extra shares were granted by the government. It means some staff who had £12,200 of shares on Friday morning had almost £17,000 worth on Friday afternoon. Asked to explain the apparent contradiction between taking free shares and voting to strike, a CWU spokeswoman told the This is Money newspaper: “Who is going to say no to free money?”
Royal Mail shareholders awaiting strike ballot outcome on Wednesday
Sources at the CWU yesterday said the result of the strike ballot would be revealed on Wednesday and used to demand an agreement over terms and conditions for staff. If an agreement is not reached within three weeks, the union will call a strike.
"It is likely to be an all-out strike first, then rolling strikes in the run up to Christmas," a union source has told the Guardian.
Analysts said the expected vote could leave a cloud of uncertainty over the Royal Mail share price ahead of its first day of unconditional trading on the stock market tomorrow. Royal Mail staff cannot sell their shares for three years, so they will be unaffected by the fallout from any industrial action.
Joe Rundle, head of trading at broker ETX Capital, said: “The outlook for Royal Mail is rocky – there is the possible strike and the uncertainty around future opportunities and competition. Most retail investors are not in it for the long term, which will contribute to the big downward pressure on prices we expect.”
Shares in Royal Mail today opened 0.57 percent down at 455.80p
As of 08:00 BST buy Royal Mail shares at 453.75p.
As of 08:00 BST sell Royal Mail shares at 453.00p.