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. Â This is the first critical step to provide long term stability and certainty for Royal Mail, our employees and our customers. Â 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. Â 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.