Increased Exploitation in the UK Postal Service

We dealt with the turmoil and chaos in the Postal system last year in an earlier article. The projected “job losses” are now being put into effect. There are more than 30,000 jobs expected to disappear.

The attack upon the Post Office, in all its different sections, is intended to break up the large state enterprise which employs a significant number of workers. That has already been done with other industries, from the docks to telecoms. It also plays another role, that of experimenting with state sponsored reorganisations, seeking models for the knife to be taken to the Health Service. The projected strategy for the Health Service is the involvement of Public Private Partners [PPP]. The role of PPPs will be to provide access for private capital to the Health Service, in the form of investment, and the creaming off profits, instead of just getting interest payments.

At the beginning of the year the Government was dithering about how it should proceed. Should it continue with some sort of state-supported national postal service, or follow the recommendations of its own state-sponsored regulator, Post-Comm?

The approach Post-Comm wanted was more the break up of the Post Office into smaller units, with the market being opened up to more intensive “competition”. The much cherished “free market” (of Adam Smith and other crazies) may do wonders for individual enterprises, but then again the state must appear to take into account the administration of society as a whole. It is one thing to consider retrenching the postal service to the profitable areas (often called “cherry picking”); it is another to let the universal postal system itself disappear. Consider the bizarre consequences of not having a universal postal service, with a guaranteed delivery to all parts of the country – there will be areas where the “writ” of the post will not run, for the Courts, Inland Revenue, and other Government departments. In the end some other agency, at whatever cost, will have to be created to cover this.

During March the examination of the various opinions were being considered by the Department of Trade and Industry. The post offices (for the sale of stamps and the acceptance of registered post) often depend upon fees for the paying of state benefits (pensions, social security payments) to pay their way. The state is planning to scrap this arrangement, and instead issue plastic cards for payments to be made through banks. There are two types of post offices, the main post offices (state operated) and sub-post offices (private franchises). A proposed network of sub-post offices has been suggested (which is just an excuse getting rid of some of them through “amalgamation”). The issue of a universal bank through which people can get there money using the proposed plastic cards has been raised. There has already been a retrenchment of the banking system – unprofitable branches have been closed, often limiting them to urban areas. Some areas in towns and cities have already become bankless. Perhaps this is the “enlightened self-interest” of Adam Smith?

The Reaction of the Communication Workers Union

While the powers that be considered the two options for the future of the Postal system the Communication Workers Union [CWU] decided to publicly intervene. Of the two options, they decided to back the retention of the Consignia type of operation. A warning was given to the Labour Party that if the Post-Comm option was favoured the members of their union would not be able to distinguish between the actions of Post-Comm and the Labour Party. Then the “pressure” to break the link between the CWU and the labour party would become very worrying for the leadership, according to its General Secretary, Billy Hayes. Mr Hayes was quick enough to say that he personally did not support any move to break the link with the labour party, as there is “no viable alternative outside the labour party”.

After the internal state decisions had taken place, there was the announcement of 13,000 jobs going at Parcelforce, the parcel delivery arm of Consignia. This would be by redundancies as part of the “restructuring” of the parcel delivery service. In June there was an announcement of a further 17,000 job losses, this time in the postal delivery system itself. More job cuts could be on the way when the transport review has been completed. The CWU was quick enough to oppose any compulsory redundancies.

Stating that he was concerned at the morale of the postal workers in general, the new Chairman of Consignia, Allan Leighton, announced early morning visits to sorting offices to explain to shop floor workers what is happening. He will be busily presenting financial figures on the need for restructuring, to bring the Postal system back into profitability. Of course the figures in the accounts have been suitably prepared to show “losses”, but where these come from are neatly buried in sub-totals. Only the stark choices facing the industry are supposedly apparent.

No doubt Mr Leighton will be asking for commitment for the workers on the shop-floor. He had only just decided to resign his directorship of Scottishpower after speculation about his diverse interests. Whether this was a large financial sacrifice is not known – he has still another nine directorships, besides Consignia, to supplement any largesse available. That same commitment will not be forthcoming from him – when sought out by the Government to take over the running of the Postal system, he was reputed to have said: either I get the backing of the Government, or I’m off! Such a luxury of flexible options does not extend far down to the shop-floor.

Immediate measures with the object of raising morale were announced. The publicly despised name, Consignia, has been consigned to the waste paper bin. A new name, the Royal Mail Group Plc has been devised, which is simply the resurrection of an earlier name for the Post Office. And the corporate cost for this branding exercise, a cool £1million. In an attempt to cheer up the shop-floor, the knife would be taken to the top-heavy management structure. The Chairman was happy to announce that job cuts would include a “significant” reduction of management layers. There are seventeen grades of management, circuits for the endless passing of reports, and the buck! No mention of job losses at Board level was made, of course.

All this was to distract attention to the real attack, the saving of £350 million by the scrapping of the second post, where two daily deliveries are made Monday to Friday. That figure will be the costs of the posties who will be dispensed with in order to cut costs. It is not a mere saving of costs but a lengthening of the working day. Whereas now letters in the urban areas are usually delivered by late lunchtime (including the second post), the public are being warned that the post can be delivered late in the afternoon. This will mean the cutting out of postal rounds by combining areas which a single postie will cover. So the same worker will begin early in the morning and be delivering late into the afternoon. Any of the old flexibility they may have had will be taken away.

Union cooperation in the restructuring plans

The General Secretary of the CWU was allegedly firm in condemning enforced redundancies, and saying that “we want the company to demonstrate to us that the restructuring will work”. The company duly obliged by the publication of the financial figures for the year 2001/2. The bottom line was a daunting loss of £1.1 billion. This was nearly all composed of “Exceptional Items”. The Times indicated that the “Exceptional Items” included £700 million to cover redundancy charges. This is really a sophisticated financial slight of hand, an accounting legerdemain, where losses have been created to justify their own expenditure, to remove more than a third of the workforce.

Having created this bottom line loss of £1.1 billion, with the press shouting about losses of £1.5 million per day, an atmosphere of disaster is brought into being. But the losses before the “Exceptional Items” were down on the accounts as £68 million, which gives a daily loss of 0.2% of the hyped figure in the press. And even that small loss depends upon “right-offs”, assets being removed from the balance sheet and counter-balanced as an item of expenditure.

The “disastrous” losses, a postal service in crisis, and needing to be “turned around”, had another useful effect for the new Chairman of Consignia/whatsitsname – the Government announced that the Treasury would release £1.8 billion that it had been “holding” on behalf of the Post Office, to aid its restructuring. And so wagon loads of money are suddenly available, not to improve the services to the public, but the mass sackings of 30,000 postal workers. This is what the state has been after all along.

The amount the Treasury are providing the Postal service (£1.8 billion) through the good offices of Patricia Hewitt, the Trade and Industry Minister, is defined as past cash and dividends paid by Royal Mail to the Government. It now seems that the European Union [EU] has been consulted as to whether they have any objections to the cash injection.

The reason for this sudden consultation is because the European Commission has recently criticised Deutsche Post, the German Post Office 9owned 69% by the state), for using E.572 million of public funds, intended for providing the letter delivery service, to subsidise the parcel delivery service instead. If Deutsche Post fails in an appeal to the European Court of Justice, then it faces repaying the E.572 million, plus interest. This case arose out of a complaint brought by the US owned United Parcels Service as unfair competition, because Deutsche Post’s door-to-door parcel service was being provided below cost.

The rationale of the European Commission is that a state monopoly in the postal system can be subsidised, but not in services which are open to competition. In Italy the Poste Italiane are permitted to make such subsidies. “But when Deutsche Post uses state funds to engage in practices which hurt competitors, that becomes a competition issue.”

How the Redundancies will take place

The leadership of the CWU plays right into the hands of management by “opposing” only compulsory redundancies. Compulsory redundancies are more expensive, in giving notice, “consultation” and other niceties that go with the whole process. They will simply call for volunteers, those who have had enough of all the abuse and bullying by management, and simply be glad to be away.

But there will be another process which will get under way, what is sometimes called “natural wastage”, that is those who leave during the normal course of events. There will be those who retire, and then there will be those who management will be out to get rid of, whether driven to sickness, or dismissed for alleged misdeeds. This will be all to save on redundancy payments. The CWU will not stand in the way of the spate of dismissals that will take place.

The only recourse will be for the shop-floor workers to try and defend their own, and no doubt the CWU will be in there to convince the workers to put the matter “into procedure”, and hope that the intimidated workers somehow escape their fate. It will be in this process that the CWU will be drawn even closer towards management, into being a junior partner in the “saving” of the Postal system.

The fallacy of these procedures was shown in the case of two postal workers (who are brothers) who were dismissed for alleged football hooliganism in May 2000. They were caught on camera supposedly fighting (in fact protecting people from attack) during the Copenhagen 2000 Eufa Cup Final, between Arsenal and Galatasary. When they were dismissed there were unofficial strikes to try to get them reinstated.

No doubt the CWU intervened in order to put the case “into procedure”. If it could not be settled by internal negotiations, then the case would go to an Employment Tribunal. The hearing was held and the decision was that the dismissal was unfair and that the brothers should also be reinstated. This Consignia has refused to accept. The CWU has been busily negotiating, but unsurprisingly to little avail. There have been reports that large settlements are being discussed – one is being offered £125,000, the other “a lesser amount” – to settle the matter. This is not because of the negotiation skills of the union officials. Rather it is the threat of more unofficial strikes, in the key London area, which is causing Consignia to consider large payments. The outcome of such a strike would mean either a victory for the dismissed men (only to be set up at a latter stage by management) or a protracted near national strike if consignia made any attempt to move “blacked” mail around the country to have it sorted in other areas.

The reliance of the workers upon unofficial strikes, keeping their affairs as much as possible out of the hands of the union’s officials, is the only way the postal workers can protect their interests. It shows once again that the workers need their own economic organisations, in order to fight out the class struggle, and prepare for their own emancipation.