Postal strikes begin tomorrow.
As a result of the strikes, Royal Mail have lost several lucrative contracts. Customers switch from Royal Mail during strikes, and plenty of them don’t switch back. It used to be fax machine sales that jumped during strikes — and people still used them after the strikes were over. Now scanner sales are up 25%. It is just like when Paris Metro, fed up with strikes, decided to replace train drivers with robots.
The strikers are shooting themselves in feet. They are sowing the seeds of their own destruction. Instead of getting higher wages, the workers may just end up unemployed. It is a sad thing when an unsound company is driven into the ground by above-market wage demands.
Of course, this is the problem. Royal Mail wages aren’t set by the market. In competitive markets, wages are set by the market. But where there is only one big state-owned company, wages have to be set by “national pay deals” and the like.
So you might say to the strikers: fair enough. If the only way you can raise your wages is to lobby the government, then you’ll have to lobby the government. But surely we should instead change the system so that their wages are set by the market. Then they wouldn’t have to go on strike. Private companies suffer far less from strikes that state-owned companies. And when they do, you, the customer, can use someone else. Unions flourish in the public sector where competition is not allowed: they are rent seekers out for a cut of the monopoly profit.
The proposed privatisation of Royal Mail is really a distraction. If we had competition, it wouldn’t matter who owned Royal Mail.
Currently, any firm can collect and distribute post, but Royal Mail has a monopoly on the delivery of all post weighing less than 350 grams or costing less than £1 to send. Other firms must turn post over to Royal Fail for delivery (the “last mile”). Far from being “completely deregulated”, the postal market is only “somewhat deregulated”. It’s not enough.
Royal Mail’s monopoly must be ended.
The Universal Service Obligation could be maintained to placate subsidised voters living in remote places. The government could simply insist that new firms could only enter the market if they also fulfilled the Universal Service Obligation.
(A few final points: Royal Mail should not be confused with the Post Office. Planning laws should be relaxed to allow competitors to build post boxes. And while privatisation of Royal Mail is not necessary, the money it raised would help pay off the government’s debt.)

