Inflation-busting pay deal averts Royal Mail strike

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The Royal Mail and union leaders hammered out a pay and productivity deal yesterday to avoid the first national postal strike for a decade.

The agreement was struck amid claims by the Communication Workers Union that it delivered "key aspects" of the organisation's vision for postal workers and management arguments that it involved only "small elements of new money".

After eight weeks of talks, the deal means the basic pay of workers will rise by 3.9 per cent. The Royal Mail said more than £25m would be paid to postal workers in productivity payments this year on top of an above-inflation wage increase.

The union will recommend the deal for acceptance in a ballot of postal workers after it was "overwhelmingly endorsed" by its postal executive. Billy Hayes, the union's general secretary, said: "This is a progressive and unprecedented agreement that will deliver significant benefits to postal workers. Royal Mail has responded to our clear vision of higher pensionable pay, job security, pension investment and a progressive attitude towards managing and growing the business."

Dave Ward, the deputy general secretary, said the agreement was the first step towards raising the status of postal workers' jobs. "We have put the union right at the centre of the company and we are confident we can now shape the future in a way that will be acceptable to our members."

Adam Crozier, Royal Mail's chief executive, said the deal meant increased earnings for employees and greater capacity for customers. "We're getting on with tackling the competition - not each other." The deal includes a 2.9 per cent pay rise and an additional 1 per cent through efficiency savings.

The union said the agreement was the "first clear step" towards permanently raising the value and status of postal workers' jobs. The union had warned of strikes after the Royal Mail imposed a 2.9 per cent pay rise.

Mr Crozier said that, under the agreement, the Royal Mail would be able to increase its capacity for delivering advertising mail. The Royal Mail said that under a previous agreement postal workers would only deliver three unaddressed letters per home each week. Now there was no limit on commercial circulars.

The spokesman said the union had also agreed to the testing of new sorting equipment which would greatly increase productivity.