Communication Workers’ Union caves in on pensions

cwu88,000 postal workers are set to see their existing defined-benefit pension scheme torn up by Royal Mail. Defined-benefit schemes promise to give a guaranteed level of retirement income, in RM’s case linked to the career-average salary. Because such pensions are paid out regardless of fluctuations on the market, they are at least tacitly recognised as deferred wages.

A year ago Royal Mail announced its intention to tear up its workers’ defined-benefit pension scheme, following the bad example of most businesses. It wants to scrap this in favour of a scheme in which workers are expected to share market risk with the employer, subjecting their hard-earned retirement pay to all the vagaries of the market.

Given that RM announced its intentions a year ago, resistance organised by the union has been lacklustre. In October 2017 the Communication Workers Union (CWU) announced a national strike, but backed down when RM secured a High Court injunction on a technicality. Rather than fight the injunction, the CWU opted for mediation. The mediator proposed a fudge, recommending that both sides should commit to a ‘collective defined-contribution scheme with a defined-benefit element’, with, as the FT puts it, “the investment risk … socialised between both workers and generations” – i.e. the workers sink or swim according to market conditions. (Note how the FT slips in the “generations” hint to subliminally reinforce the message that workers should not ‘greedily’ demand payment of their deferred wages in full lest they place a burden on the next generation of workers!)

Obstructed by the High Court and bamboozled by the mediator, the CWU went ahead and agreed to these terms on 26 January. And since it seems that the type of scheme detailed by the mediator will actually require secondary legislation, the CWU has not only failed to give leadership to the 88,000 postal workers it represents but has also helped open the door to similar schemes to be foisted on other workers (see Patrick Hosking, ‘Royal Mail averts strike with deal on pensions’, Financial Times, 27 January 2018).