Royal Mail – The aftermath of privatisation
Royal Mail’s share price jumped from the offer price of £3.30 to £4.89 at the close of business on the first day of open trading. 100 million shares (about 10% of Royal Mail) were traded within an hour of the Stock Market opening.
The House of Commons Business Select Committee are getting ready to grill Lazard (the investment bank who were asked to review Royal Mail’s offer price in the last two weeks) along with Vince Cable the Business Secretary, with concerns the sale price was too low. They want to know if the country lost on out a potential billion pounds.
And a billion quid is still a billion quid. To put it into perspective, the Winter Fuel allowance for pensioners costs the country about £2.1 billion per year. Half of that could have been paid by pricing Royal Mail a bit higher and shareholders would still have seen a nice bump on flotation day.
Moya Greene, Royal Mail’s CEO is already calling for more “protection” for the company with the expectation that the CWU will have a mandate for strikes. We’re expecting the CWU to make an announcement some time Wednesday morning. She said “We need to start thinking about what sort of protections do we need as a company from our people, from what has been probably too quick an approach to resort to industrial action“.
The only thing that’s not too clear is who Moya is calling to provide the “protection”. Royal Mail is no longer a 497 year old government institution, it’s now a 1 day old company owned by it’s shareholders. It is of course not impossible to have a great working relationship with the Unions, just look at Tesco with 472,000 staff (three times as many as Royal Mail) and the great relationship they have with USDAW (Union of Shop, Distributive and Allied Workers). Tesco staff don’t go on strike too often.
Dave Ward, CWU deputy general secretary, said of the sale “The Royal Mail share price has soared further today, bringing more proof that the company was undervalued by the government’s city mates. The taxpayer has lost over £1 billion already in this bungled fire sale of a cherished national institution. Postal workers cannot trade their shares for three years and they are far more concerned about their jobs than the share price“.
The Union want to secure a deal on protecting jobs, services and terms and conditions in the company. In a meeting of postal workers on Tuesday they said “The privatisation battle is over – but the war to protect pay, jobs, terms and conditions is on“.
Let’s be honest, Posties are in the main hard working and deliver a fantastic service come rain, sun or snow. They’re out in all weathers and whilst we may grumble about the odd missing parcel, ecommerce wouldn’t be the same without out postal service. Sure, they’ve been gifted with £2200 worth of shares each, but unlike the general public they can’t cash them in for years.
Posties just want to know that their jobs are safe and that they won’t have ever increasing workloads and won’t get hit in the pocket with pay and overtime cuts. None of that, in the face of it, is an unreasonable request. Now it’s up to Moya Greene to make peace with the unions before everyone’s Christmas is ruined.