Friday, 12 December 2014
Is Zero Hour Approaching for the Royal Mail?
Not that I am privy in any way to its inner dealings or the strategies being followed by those whose job it is to set the direction of the business, of course. Indeed many of my colleagues would probably argue that they are usually the last to know anything that is going on, but upon that I couldn’t possibly comment. I am, presumably, entitled to express a view on those things that are in the public domain, and to have an opinion on where the mail service in the UK is likely to be headed over the next few years or so.
UNIVERSAL SERVICE OBLIGATION
The Royal Mail, uniquely, is committed by the terms of its charter to honour what is known as a USO, or Universal Service Obligation. This compels it to undertake deliveries to every address in the United Kingdom six days a week, no matter how remote or difficult to access they may be. In doing this it must operate a common charge to all customers, whether a letter is being sent to one’s next door neighbour or to a hermit living on the top of a Scottish mountain or in a tent in the middle of Dartmoor. That is the deal, from which the service is not permitted to deviate.
It would seem the political establishment has decided, in its wisdom, to introduce the principle of competition into the world of mail delivery. On the surface of it this may not seem unreasonable; competition can be a healthy thing which challenges the complacency that comes with monopoly and offers the customer a choice. Competition can bring out the best in the provider of a service and ensure that it ups its game.
The problem with what is being offered in this particular instance is that that competition will not be operating on a level playing field. Unlike the Royal Mail, potential rivals such as TNT/Whistl are under no obligation to deliver to less profitable destinations, but rather will be able to pick and choose where they deliver, and when, and at what cost to each particular area. Whilst the Royal Mail must use at least some of the profit it generates from the service it provides in the more populated regions to subsidise the losses it will inevitably make in more remote parts of the country, competitors will have the freedom to operate in the more lucrative areas whilst leaving the rest to the Royal Mail. The outcome must inevitably be that the Royal Mail will lose income in the towns and the cities, making it more difficult to provide the necessary subsidies to rural destinations.
This case has been put, thus far unsuccessfully, by Royal Mail’s management to the government. In rejecting the case, the government is insisting that there remains scope for the Royal Mail to introduce more efficiencies into the service it currently provides.
There is always, of course, room for improvement in any organisation. I am sure there are ways yet to be discovered in which the current service can be redesigned and realigned to provide more bang for its buck. But to achieve the massive changes that will be needed to allow it to compete on anything approaching level terms with the newcomers who are being given every encouragement to enter the field the service will need to be completely transformed on an absolutely fundamental level. Thus far all concerned parties have steered very well clear of any mention at all of this particular elephant in the living room.
The Royal Mail is an industry which has developed organically over a period of almost 500 years, having first appeared in an admittedly primitive form under Henry VIII. Today it employs over 150,000 staff, is unionised and pays its workers a reasonable wage as well as offering holiday and sick pay. Inevitably there are grumbles from the shop floor from time to time about the treatment of employees - some justified, others less so - but anybody who has worked in the “hire 'em, fire 'em” environment much favoured by successive recent governments, as I have, will know just how reassuring it feels to enjoy some kind of protection in the workplace. Under the present conditions it is very likely that competitors will be minimum wage employers, possibly operating zero-hours contracts, and under terms which sidestep the requirement to provide even the most basic of employment protections and benefits. When the Royal Mail is being told it has room for further “efficiencies” which will enable it to compete with all comers, it doesn’t take a genius to work out where the powers that be are looking to take us.
My guess is that once competition opens up, possibly as early as next year, the Royal Mail will be forced into a position where it will need to try to compete on similar terms. The unions will not - cannot - accept the redeployment of their current members on vastly inferior terms so it is perhaps inevitable that a large-scale diminution of its current workforce will follow, initially and hopefully solely through the use of voluntary redundancy payments, accompanied coterminously by the redesignation of those who remain, and the simultaneous employment of new staff (possibly sub-contracted) with different job descriptions, different uniforms but essentially a replacement for the traditional postie.
For those who think I am being sensationalist, I have seen this happen before - indeed I have been part of the project. As a Duty Manager at Skycaps at London Heathrow Airport I was paid considerably less than the shop-floor former porters whose jobs the company had replaced, and who had been reassigned to other duties. It happens.
Just how much dedication and loyalty these dispensable, ten-a-penny, untrained (some untrainable), high turnover, completely unmotivated employees will have for the company I will leave to the imagination of the reader. But old King Henry must be turning in his grave.