Q&A: Royal Mail dispute

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The main postal union is balloting its members over a potential national strike at the Royal Mail.

If the industrial action by the Communication Workers Union (CWU) does ultimately go ahead, it will be the first UK-wide walkout by postal staff since 2007.

The dispute's roots remain essentially the same as two years ago, with the CWU accusing the Royal Mail of trying to cut jobs and pay without its agreement.

With a number of localised walkouts also continuing to take place across the country over the same issue, commentators say the two sides are a long way from reaching any agreement to end the industrial action.

Here are the issues at the heart of the dispute.

Is the Royal Mail definitely aiming to cut jobs?

Both the Royal Mail and CWU agree that job cuts are needed as part of a vital streamlining of the mail service to cope with the continuing downturn in postal deliveries.

What is not known is where the Royal Mail wishes to make the cuts, and to what extent.

While the wider Royal Mail Group employs 176,000 people in total, the main Royal Mail letters and packages business has a workforce of 160,000, of which 121,000 are frontline postmen and women.

Analysts agree that it is this latter 121,000 that are likely to see the most extensive cuts.

Why does the Royal Mail say it needs to trim staffing levels?

The Royal Mail says the number of letters and parcels its core business delivers are falling by 10% each year, losing it £170m per annum.

To respond to this decline in business, it says staffing cuts are inevitable, especially as it is continuing with a £2.1bn modernisation plan that is introducing more and more automation in sorting offices.

But didn't the Royal Mail make a profit last year?

It did, but it was the first time that all of its four businesses (Royal Mail letters and packages, Post Office, Parcel Force, General Logistics Systems) went into the black for 20 years.

The 2008 profit at the main letters and packages unit was £58m from a turnover of £6.7bn.

Royal Mail says this is a very small profit considering the size of the turnover, and staff cuts are required to prevent it returning to losses in the future.

The group-wide Royal Mail also has a £6.8bn pensions deficit, after it more than doubled in 2008.

So, if the union agrees that job cuts are necessary, what is its problem?

The CWU insists that while it accepts the need for job cuts in principle, the Royal Mail has yet to agree with the union over their extent and nature.

It says it has called a national ballot because Royal Mail managers are refusing to meet its demand for a signed agreement determining the scope of cuts, and job and pay security guarantees for those workers who will ultimately remain in their jobs.

The CWU instead accuses the Royal Mail of trying to drive through redundancies.

But doesn't the Royal Mail say it already has agreement from the union for job cuts?

At the heart of the latest dispute is the deal that the two sides signed to end the 2007 national strike.

The Royal Mail says that by signing up to that agreement the CWU accepted the future job cuts it needed to make in order to modernise the service.

The CWU counters that the 2007 agreement only talked of the need to make future cuts, and not their extent, which still needs to be agreed.

Is the government getting involved?

So far no. Business Secretary Lord Mandelson last month rejected calls to intervene, saying it was a matter for the Royal Mail and CWU to reach agreement upon.

However, the union continues to call on Lord Mandelson to get involved, reminding him that the Royal Mail remains government owned.

What is certain is that the government recognises the need for the Royal Mail to streamline.

Earlier this year the business secretary was pushing to part-privatise the Royal Mail, saying that taking a private firm on board was the best way to secure vital outside funds and modernise its business.

However, Lord Mandelson was forced to announce in June that the part-privatisation plans were being delayed, amid opposition from many Labour backbenchers and a failure to find a buyer.

If the national strike does go ahead, how disruptive will it be?

It depends how many workers take part in the industrial action.

Back in October 2007, the two 48-hour UK-wide walkouts brought most deliveries to a standstill.

In addition to the annoyance and inconvenience to customers, any new national strike would again have a major impact on businesses, especially those that deliver their products to consumers through the standard post.

The London Chamber of Commerce estimated at the time that the 2007 strikes cost the capital's economy alone more than £300m.