Sounding The Last Post For Royal Mail?
October 22, 2009
Any organisation whose performance and reputation declines as precipitously as the Royal Mail’s in recent years cannot expect to survive. Battered by the rise of the internet, competition from leaner and more flexible rivals, a massive pensions shortfall and an increasingly truculent workforce, this once proud British institution’s final blow may well be self-inflicted.
To contemplate a national strike at this time is suicidal and I cannot help but wonder whether in twenty years, we shall look back on this time with surreal disbelief as an apparently impeachable organisation was so swiftly snuffed out. From today’s perspective this may seem a fanciful prospect, but look back in recent history and you will find startling parallels with the sharp declines of other great British industries. The Royal Docks provide one such example. Having overcome the destruction wrought in World War Two, the docks were riding high as the 1960s dawned. Within two decades by October 1981 they had all closed.
Containerisation, technological change and a switch in the way in which Britain traded following EEC membership led to a rapid decline in the docks’ use. Alongside this, however, emerged an ever more assertive workforce. In 1967, all casual dock working was stopped. Each worker was guaranteed a minimum weekly wage and could not be sacked except for misconduct. This created a fixed workforce of 23 000 that simply was unable to be fully utilised as mechanisation took over. Though working numbers had dropped to 8800 by 1977, there were still too many men for the work and employers looked to cut numbers, introduce flexible hours and a shift system.
This led to bitter industrial disputes in the late 1960s and early 1970s as the trade unions deliberately obstructed the introduction of new technology. This only encouraged and accelerated the use of alternatives. So by 1978, the Port of London Authority found itself on the brink of insolvency and central government was forced to order restructuring to make the operation commercially viable. In the end public money haemorrhaged so rapidly that the London docking industry had all but died by the dawn of the new decade. Anyone familiar with the workings of the newspaper industry will know that that sad tale mimics the demise of the print workers, when the move of several leading newspapers to state-of-the-art premises in Wapping sealed their fate later in the 1980s.
Today the Royal Mail teeters over a similar precipice. Throughout the 1990s, Royal Mail was riding high. Largely untouched by overseas competition and electronic mail, the company made healthy profits ? one should have expected nothing less from an organisation with such monopolistic clout. This decade has been a starkly different story. Hit by EU Directives in 2003 and 2006 that demanded an opening up to competition, the cosy UK postal market has been wrenched open to new service providers. Alongside these developments came the rise of the internet (which not only introduced the email, but put banking and a lot of form filling online). Rather than capitalise on the rise of mail delivery from internet shopping and secure value from its well-established distribution network, the Royal Mail has instead been paralysed by the change, most recently losing lucrative contracts from Amazon and Tesco Direct who have sought a more reliable courier to deliver their reputations. Similarly the prospect this year of Christmas cards not being delivered will persuade millions of individuals to send seasons’ greetings by email: they may never again rely on the Royal Mail for the year’s biggest mailshot.
It did not have to be this way. But Royal Mail simply cannot bring itself to modernise. Just as the government pumped money into a pampered Royal Docks in the 1970s, so too the Royal Mail has received a public cash injection ? this time to the tune of £2 billion ? on the condition that it modernises. But the attitude of its labour force (from both senior management and an obtuse, stubborn trade union) will not allow it to happen because it will mean job cuts and adaptation to new systems. It will also bring an end to some pretty inflexible working patterns – practices like the ‘job and finish’ (staff going home early if they finish a round before their shift ends), the right to refuse to work outside designated postcodes and workers refusing to deliver an extra two streets to provide holiday cover. In fact all these practices were agreed to go but miraculously persist. Just as in the docks and printing presses three decades ago, the new technology of the sorting office also lies largely unused as a result of obstinance.
When an industry and its workforce begin to believe they are owed success, the seeds of their eventual destruction are sowed. In economic hard times, no service should regard itself as irreplaceable. A postal strike on the scale threatened could not come at a worse time. The strong sentimental attachment that the British public holds towards the Royal Mail (which staved off the prospect of privatisation a decade or so ago) will be cast off as those in the private sector wonder why the jobs of postal workers should be so cushioned in times of recession. For small businesses reliant upon the postal system and struggling to keep above water, the resentment will run deeper. I believe all these elements risk working together to create a tipping point that drives away Royal Mail custom to rivals so rapidly that the company’s problems will only spiral.
In truth few can doubt that successive governments have failed to tackle fully the unnerving reality of the Royal Mail’s prospects. The quagmire in which this organisation finds itself does not rest exclusively at the doors of management and workforce. Conservatives must accept that it will fall to us either to preach commercialisation to a more streamlined Royal Mail or leave it to its fate. To those contemplating a prolonged national strike, the lessons of history could not be clearer.