The Royal Mail share price, also known as International Distributions Services PLC (LON: IDS), has risen 25.6% in the past month as investor sentiment towards the company improved. The biggest part of the month-long rally was over the last few days after the company and the CWU reached a pay deal.
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The mail and parcel delivery firm reached a pay deal with employees represented by the Communication Workers Union (CWU). The workers will get a 10% pay increase, combined with slight changes to how the company operates. The workers will now have to work on Sundays as part of the deal.
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The CWU voted to approve the pay deal that would see their salaries rise by 6% this year, in addition to the 2% increase already in effect. The workers will get a further 2% pay increase in April 2024.
Over 75% of CWU members voted in favour of the pay deal, which introduces benefits such as later start times beginning in 2024 onwards, changes to sick pay and the guarantee that there will be no compulsory redundancies.
Royal Mail staff will be required to work with more seasonal patterns from autumn 2023. This means they will do more hours during the busier periods like Christmas and work less in quieter times like summer. New employees will also be required to work on Sundays.
However, the pay deal has attracted some scepticism from analysts at Liberum, who cautioned that things will get worse at Royal Mail before they get better. The analysts warned about the challenges that could bedevil the deal’s implementation.
Critically, the pay hike is immediate, while the changes in working patterns will be implemented in phases, which could pose a challenge. The analysts are worried that Royal Mail may be unable to implement all the planned changes over time, given the CWU’s past resistance to change.
Royal Mail faces significant challenges given that the company is still losing a lot of money daily, and there is no clear path to recover and return to profitability.
*This is not investment advice.
Royal Mail (LON: IDS) share price.
The Royal Mail (LON: IDS) share price has rallied 25.63% in the past month. Will the rally continue?
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