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Royal Mail PLC Increases Staff Pay To Avoid Strikes

royal mail

Royal Mail (LSE: RMG) workers are set receive a 9% pay increase over the next three years after agreeing to curb their rights to strike. The workers will also receive additional rights and protections — for example, the firm’s current policy of employing mostly full-time staff will continue, there will be no additional outsourcing as well as a pledge not to introduce zero hours contracts.

Members of the Communication Workers Union backed the agreement by 94%. The pay rise will be spread over three years, with workers also receiving a £200 pensionable lump sum in time for Christmas this year; while the guarantees on job security will last for five years.

The measures will prevent local strikes, long a burden for the postal firm, with the threat of national action also removed.

Moira Greene, the chief executive, commented:

“I am pleased that our people have voted in favour of the terms of the agreement.  This is the first critical step to provide long term stability and certainty for Royal Mail, our employees and our customers.  Now the hard work starts. Working together we will create a strong foundation for the continued success of our business.”

Royal Mail’s recent post-Christmas results were largely positive as parcel revenues increased.  The share price is 587p — a 78% increase on its 330p share price after floatation.

With a market cap of £5.9 billion, Royal Mail shares trade at 13 times earnings, offering a potential income of around 3%.

The decision to ‘buy’ — based on those ratings, today’s results and the wider prospects for the delivery sector — is solely your decision.

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> Mark does not own shares in Royal Mail.