The Royal Mail (IDS) share price is trading sideways as the pay dispute between the company and the Communication Workers Union (CWU) persists. The two sides could not compromise during negotiations under the Acas framework held in January this year.
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The CWU insists Royal Mail should table a better offer, yet the company is adamant that the 9% pay increase over 18 months is its best and final offer. CWU had called for another strike on February 16th, which it had to cancel after the parcels delivery company legally challenged the strike in court and won.
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Investors are concerned about the ongoing standoff between Royal Mail and its workers, which will continue to threaten the company’s future as it is losing about £1 million daily. The company’s CEO, Simon Thompson, and its chairman, Keith Williams, have been summoned by parliament for a rare second grilling.
In his earlier testimony, Royal Mail CEO Simon Thompson highlighted all the changes the company had made by investing in technology and automating its handling of parcels and letters to remain competitive.
The CEO insisted Royal Mail must reform its working relationship with the CWU to compete effectively against its peers. When asked about his massive annual salary of £540,000, 23 times that of the average postie, Thompson said that Royal Mail pays its posties about 40% above market rates.
Thompson has been summoned back to Parliament to give more details about his plans for the company and how he plans to resolve the standoff with the CWU.
Meanwhile, the CWU will likely stage another strike as they continue agitating for better pay and working conditions. The union also wants Simon Thompson to resign as Royal Mail CEO. However, the CWU has had issues with all former Royal Mail CEOs who wanted to reform the company’s work culture.
I have pointed out that investors may support Thompson’s firm position against the CWU since every other CEO who has tried to change the company has met stiff resistance from the union despite the much-needed changes.
*This is not investment advice.
The Royal Mail share price is trading sideways as investors expect more strike action.
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