Royal Mail reaches agreement with CWU as parcels become focus

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Royal Mail PLC (LON:RMG) said it has agreed a two-year pay deal with its main union just hours after suspending deliveries to Europe because of the mutant COVID-19 strain.

Parcel deliveries have been booming during the pandemic and in a trading update also released today the postal group added that revenues in the eight months to November was £380mln higher than a year ago.

GLS, the European operation was a key part of this with growth of 21.9%, but today Royal Mail said that it had temporarily stopped all services to Europe because of the restrictions on movements in the UK caused by the new COVID-19 outbreak.

France has shut its ports to UK traffic with air travel also halted to many countries across Europe and elsewhere.

Royal Mail added that the agreement with the Communication Workers Union (CWU) allows for it to upgrade its postal services technology and gives more flexibility on shifts across its operations.

Handwritten sign-in and sign-out will be phased out with a re-jigging of staffing planned by October 2021, with annual revisions thereafter.

A review of the operational network will conclude by April 2021, it said, with a heavy emphasis on supporting the growing parcel network and maintaining an efficient letters operation.

New parcel hubs are planned alongside the introduction of dedicated van delivery duties for parcels as well as the possibility of more frequent deliveries throughout the week.

In return, CWU members will receive a 2.7% pay increase backdated to April 2020 and a further pay increase of 1% with effect from April 2021.

Another hour will also be cut from the working week by the end of October 2021.

Keith Williams, interim executive chairman, said: “We have a window of opportunity to focus Royal Mail on what our customers want today – an ever-growing need for more parcels, whilst providing a sustainable letters service.

“This agreement provides a framework to do just that, but the proof will be in the pudding. We have been far too slow to adapt in the past and now need to deliver change much more quickly.”

Shares rose 1.5% to 328.1p.

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