Proposed Part Privatization of the Royal Mail in the UK Essay

Introduction

Royal Mail is one of the most ancient and large organizations in the world. For about three centuries, it is serving the Europeans. From its beginning to till, it remains under the government or the rulers of the state. But, the technological development and introduction of wireless communication and other ways of communication, there caused a decrease in the profitability to a level that it is now almost impossible to run for the government. For these reasons, the government has proposed to privatize the Royal mail partly. Though it is right in the sense of the profit concern, not everything should consider from an economical perspective. This part-privatization may cause a huge social problem. Thus, it is an ethical issue, which should discuss from various perspectives.

Overview of Royal Mail

Royal Mail is a public limited company, owned by the government. For a significant time period, Royal mail is doing its job in mailing, post office and parcel service. Its main strength is that it can reach everybody in the United Kingdom. More than 181,000 people are working here; therefore, to maintain these huge numbers of employees, it took different types of diversifications. It is famous for its lower-priced mailing service provider in all over Europe. Unique operational excellence and efficient service are two basic dimensions of the royal mail. Annual report 2008 reported that it processes and delivers about 80 million items per day by accessing about 28 million addresses per day. It has the ability to serve at least 24 million customers in a week through its 13,852 branches. There are four operating wings. These are:

• Royal mail,
• General Logistic System (GLS),
• Parcel force worldwide,
• Post Office

It has been serving the British for 370 years with traditional features and now it also adding new areas, like stretching, expanding and adding new featured services. It has gone through various changes for these last three centuries and it became a public limited company in March 2001. To manage its various types of operation, a trust was established in 2004. Royal mail became a liberalized company in 2006 but the volume enter in the premise of Royal mail has been declined dramatically in recent years. However, it does not hamper technological development and the earning of capital. The legal structure of Royal mail is:

Proposed Part Privatisation of Royal Mail

Before 1969, Royal mail had operated its services as a Government organization, after that, it formed as a nationalized company. In 1981, the division of telecommunications became privatized. Therefore, it is being difficult to operate a privatized company by a fully Governmental and public company. With the need of company demand, it is being decided by the chief executive of Royal Mail that, private capital should be accessed to modernize plan of the universal service provider with same costs in six days a week, which is now only serving to British homes. There are some major factors, which bound to make privatization of Royal mail such as-

Criteria of Privatising: Parker, D., (2008) stated few common criteria of privatizing, which illustrates as follows-

• Modernization: From the era of victory, Royal mail is popular worldwide for modernize postal services. But with the competitive market, it became less modernize for using human resources than machines, also with high costs. So, to increase the efficiency of the services, Royal mail should be more modernized.
• Pension Scheme: The pension deficit is becoming excess of £7 billion according to annual revenue. So, the health care benefits and pension schemes of employees should be raised.
• Global Comparisons: Consumers are always looking for better performances with high credibility, with geographic possibilities to cover the market. Therefore, the capital, labor and trade block should be removed to compete in international markets.

Therefore, it has to be proposed for partial privatization to the Government as well as local authorities. The prime minister of Britain recommended that 30% of Royal Mail could be handled by investors as part privatization, which would result in closing 30 mail centers. Hennessy, P., (2009) argued that this privatization is done for the benefits of everybody, with universal services for consumers, opportunities for Royal Mail in modernization and development, beneficial for employees in secure pension management, and for the country, which can be proud of Royal Mail. Already it received the proposal of privatization with such credible partners like Dutch postal company, TNT, etc.

Ethical Issues related to Proposed Part Privatisation of Royal Mail

The concept of public and private sectors is considered a political-philosophical question than efficiency. The privatization of Royal Mail is not far from it, which perceived Royal Mail as an icon in public concern. After becoming credited by the new Chairman in Royal mail, it is cutting 30,000 jobs, shutting thousands of post offices, and moving to annual losses of £1bn, though it is the consequence of the recession. These would create some fundamental problems for Royal Mail, also with the wage pension scheme and independent maltreatments by union leaders of it.

To remove the confusion that arises between employees, Royal Mail has given an incentive scheme as a motivational strategy, which is opposed by Government. This scheme also creates difficulties in technical and ideological opposition in old labor and privatization.

Another way of establishing ethical issues is imposing forceful leaders with ideas and vision. The employees have to follow their master with the fate of dynamic leaders. There are three issues raised from the dimensional chess in the battle of privatization, which hampers the ethical issues related to Government and other factors.

These issues are creating threats in its operations; even any powerful leader would face complexity. There are some other factors, which show Royal Mail as less confident comparing with other US Postal-Services in terms of high automation and upstreaming in mail process, and viewed Royal-Mail as Inundated by strikes.

These strikes between members of CWU¹ and Royal Mail, this was started first in 2007, with the challenge against the union. This is the focus in accordance with CEAEB² Regulations – 2003. Royal Mail could have to avoid the intentions of employees in legislation with various functions by using some strategies. These strategies could make to undermine the democratic decisions taken by the employees. National Legislative Committee (2009) reported that Royal Mail did not try to resolve the problems, but try to extend the strikes in industrial relations problems.

According to National law Proposed Part Privatisation of Royal Mail

The Britain law has very emphasized and useful criteria in jobs and postal services. The region of the law agreed that the policy of privatization of Royal Mail is stated as fully publicly owned public services. According to the PSA³ 2000, the process of market liberalization with Postal Service Regulations of 1999 under UK legislation has been imposed on postal services in the UK. As a result, Royal Mail also follows that law. In 2007, the Royal Mail faced competition in the letter and parcel market in multiple markets. Another regulatory body, the Post Service Commission is established by the act in 2000, with the objectives of-

Postcomm also issued licenses to Royal Mail delivery Network, to compete in the regulated letter market. However, after getting a license, Royal Mail had failed to meet the quality of service objectives, which is treated as anti-competitive practices that affect the financial position of Royal Mail obviously. For this reason, Royal Mail wants to develop its financial position by raising capital with the help of investors. These issues are also stated that the post offices, which are running in a loss in rural areas, should be subsided. Therefore, it has strong control and enforcement of regulations to maintain rather than social regulations.

McNicol, I., (2009) stated that this decision of the government is unpopular, unwise in sense of politics, and hamper the perception of general service provisions. Moreover, members of the Labour Party emphasized promoting the policy when all trade unions have an image of Royal Mail as a publicly owned company. They actually proposed to bring strategic partner by exchange of equity, which clearly constitutes the part-privatization of Royal-Mail by the union members to the Government to consider these issues once again. Many post offices offer some banking services from 2004 in many regions, like:

• To offer credit cards, mortgages and personal loans
• To run card accounts to maintain pensions

The idea of post services as banking services taken by Royal Mail is the main opposition in the part-privatization of it. More than 100 employees have signed to House of Common about the Governmental plan of to be parted Royal Mail to foreign business, which will create a distinction in UK’s best-cherished public service. There are also some other factors, which create dilemmas between employees and the public about Royal Mail, are:

According to the Council presentation, it is declared the motion of Royal Mail, which are:

• The privatization proposal has attracted strong opposition;
• A group of non-government organizations, trade unions and MPs is proposing that the Royal Mail be kept in public ownership.

The belief of Council about the proposal of employees are:

• Risk in job cutting of employees of Royal Mail,
• Economic instability,
• Best in keeping public ownership of Royal Mail.

Emms, A., 2009, (2009), said that the council resolves these problems by following circumstances:

• Keeping public ownership of Royal Mail,
• Proposing as national people’s bank.

According to Utilitarianism Proposed Part Privatisation of Royal Mail

The concept of Utilitarian focuses on the good and bad impacts of any imposed act, in the time of performing the act or after the results of the act. It is mainly the issues of consequences of the act and choosing alternative act about moral issues with preferred manner. It is the greater good for a greater number with quantitative and decline approaches to ethics of wisdom, experience, social skills and life skills.

According to the national law of Royal Mail, part-privatization is opposed in the case of various approaches and acts. However, Government has preferences of the concept of it. As it is said before, according to Utilitarianism, the act of Government is not the final suggestion about privatization. The wisdom of the ethics is to stay Royal Mail as Public company for the goodness of employees and public of UK, by considering the social and life skills of general people and also the employees.

Affect of Proposed Part Privatisation of Royal Mail

The proposed part-privatization of Royal mail has an effect not only on the life of the employees but also a maximum number of British citizens, who are the customers of the Royal Mail. Many political parties influenced the workers of the Royal mail to raise their voices against the closure of mail centers of Bolton, Liverpool, Oxford, Coventry, Crewe, Keynes, Milton, and Stockport. Thus, the total non-cooperation movement against the management can be a major effect of the proposed part privatization. Union leaders also initiate a national ballot, where all postal members can execute ballot power to stop mail center closures. The major effects of part-privatization can be:

Royal Mail can bypass unions and can impose anything they want. Thus workers, both who will be affected and not affected, are passing a distressing period. But, the most destructive effect will be upon the postal service of Britain. If the postal service of U. K. will completely be privatized, the quality of the delivery of the mail may be declined. Privatization threat can be another effect. If the loss of work and other assumed threats are represented through the upcoming Hooper report, the workers will go on hard-line and the total society will be the loser. They may call upon strikes and any other type of destructive movement.

The workforces of Royal Mail do not need any banks, rather than getting bailouts. The government has spent about 37 billion pounds to bail out the banks. However, at the same time, employees are closing the postal service and it becomes clear that they are now creating suitable conditions for the rich and become hostile to workers. This assumption can lead the government to fall and the workers may create a new worker-friendly political party.

From the annual report 2008, it can be said that it has both consensual effects and pacified conflicts may create problem in total postal service. The privatization was not in the election manifesto of the Labour Party, thus the worker union, which gave their support in favor of the Labour Party in the last general election, might withdraw their support. Here the operating profit and the external revenue for 2006-07 and 2007-08 fiscal years are presented:

From the above table, it is clearly seen that the operating profit becomes lower. In all the sections of Royal mail Holdings, there is a deteriorating condition is being experienced after the introduction of part-privatization.

Critically Easement

Royal Mail is going to lose its monopoly over the postal market and thus customers will deprive of the lower cost-based service. Besides, they will significantly increase privileges for business. From the union’s perspective, they will lose leadership and negotiation power. In another way, they can exercise the creation of forces over the royal mail officials. They can influence the other part of the postal business and the government also.

There is evidence that in the countries where the mail delivery service is completely privatized, about 90% of the total delivery is done by the public service providers. The foremost critical issue is that not only Royal Mail but also the government is fully dependant on the workers and unions. Therefore, if the workers go with some hard-line activities or movements, the government and the management can blackmail or try to smash the workers. However, it is a reality that still they cannot run their work without any worker.

Conclusion

From the worker’s perspective, it is not ethical to privatize the Royal mail partly. If a huge amount of people became workless, this will affect society as well as the total state. The suddenly unemployed people may start to do various types of crimes like robbery, hijack or any other illegal activities. Rather, the families of the workers will also become hopeless. The ultimate result can be unwanted social depression, which may cause a negative attitude toward the government. As a matter of fact, these huge numbers of employees will never cast their vote for the Labour party. Therefore, the Labour party will be the ultimate loser.

Bibliography

1. Emms, A., 2009, Agenda: Motion – Royal Mail Privatisation, Norwich City Council.
2. Fuller-Love, N., and Rhodes, M., 2003, Competition and Change in Postal Services in the UK, Research Paper No. Web.
3. Hennessy, P., 2009, Royal Mail privatization: 50 Labour MPs ‘would rebel’.
4. Kimble, C., 2008, MIS case study – background and assessment.
5. McNicol, I., 2009, GMB believe that the part-privatization of Royal Mail is electorally unpopular, politically unwise, and damaging to the concept of Universal Service Provision.
6. National Legislative Committee, 2009, Legislative Update: Postal Bank in UK could save Post Offices & ward off Privatization.
7. Parker, D., 2008, Privatisation: Lessons from the UK.
8. Royal Mail Holdings plc, 2009, Royal Mail Holdings plc Annual Report-2007.
9. Social Party in CWU, 2009, No mail centre closure Web.

Footnotes

1. Communication Worker Union
2. Conduct of Employment Agencies and Employment Businesses
3. the Postal Service Act