Royal Mail Privatisation: Who Really Wins?


Royal_Mail-Fail (Photo credit: charles_earlgrey)

Royal Mail shares soared by almost 40 per cent in just hours after being priced at 330p in the government flotation, underlining criticism that the Government undervalued Royal Mail at a huge cost to the taxpayers.

However, Business Secretary, Vince Cable, believes “we have struck the right balance.”

“Increasing the proportion of shares going to small investors to ensure they get their fair share and ensuring the employees get a 10 per cent stake in the business,” Cable said at a press conference.

On 8 October the 500-year-old national institution saw shares hit a high of 475.3p in early trading – valuing the company at almost £4.8 billion, compared with its £3.3 billion initial valuation on Friday.

Demand for shares far exceeded supply, seven times over-subscribed for private investors, with almost 700,000 applying for shares, according to the Business secretary, Vince Cable.

Private investors who applied for the minimum £750 up to £10,000 will receive shares worth £749.10. Applications for more than £10,000 will receive nothing.

A cheerful and determined picket was held at t...

A cheerful and determined picket was held at the Royal Mail Bowthorpe depot, Norwich, England on the second day of the national UK postal strike against speed up, bullying, harassment, job losses, and privatisation being imposed by the management and the British Labour government (Photo credit: Wikipedia)


At the same time, Communication Workers Union (CWU), which represents 120,000 Royal Mail employees, are set to vote on a strike over pay and working conditions on Wednesday.

The Union said they don’t expect the offer of shares and privatisation to affect the outcome of a strike ballot next Wednesday.

“On one hand we are seeking a pay rise for the staff, because they haven’t had a pay rise since April 2012,” said the CWU spokesperson. “In addition, we are also seeking a legally binding agreement with the company that would protect jobs and the terms and conditions of jobs.”

The voting strike ballot will close on 16 October, which means under the current rules on industrial action; the earliest a strike could take place is 23 October.

A strike action could reverse the share price rise, an effect that could be increased on Tuesday when retail investors who bought through the Government rather than a broker will get the first chance to sell. Workers granted free shares will not be able to sell until 2016.

Royal Mail has also warned that more postal workers will lose their jobs following the privatisation.

Postal workers are concerned about what this privatisation means for their jobs, and for their future careers in the company.

“What we have seen, time and time again in privatisation, is that the workforce suffers as a result of shareholders wanting to get a maximum profit,” said The Union. “So, jobs are lost, pay is depressed, people are employed on inferior terms and conditions. “

The company refused to state how many of Royal Mail’s 150,000 employees will be axed. The forthcoming cuts come on top of 50,000 jobs lost over the past decade.


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