Strikes will put Royal Mail in the red - Mandelson

The finances of Britain's state-owned Royal Mail will dive into the red if a planned national strike by workers goes ahead this week, business minister Peter Mandelson said yesterday.

Thousands of postal workers will stage strikes organised by the Communication Workers Union tomorrow and on Friday in a dispute over pay, jobs and modernisation at the company.

Talks are ongoing between the company and union to try to stop the action which would cripple deliveries and embarrass the Labour government, already well behind in opinion polls to the opposition Conservatives with an election due by mid-2010.

"Royal Mail's finances will be plunged into the red. Last year the company, out of a £6.7 billion mail business turnover, made less than one per cent profit," Lord Mandelson told Parliament.

"One thing this company cannot afford is strikes and industrial action."

CWU general secretary Billy Hayes said Lord Mandelon's comments would damage the negotiations.

"The union remains in talks and is working hard for an agreement," he said in a statement.

Royal Mail's business has suffered in recent years as consumers and industry switch to the internet or more specialised postal services to exchange information, services and goods.

The government wants to sell up to 30 per cent of the company to make it more competitive but has had to shelve those plans after opposition from workers and Labour politicians - and what, in July, Lord Mandelson called unfavourable market conditions.

Lord Mandelson said that without embracing change, Royal Mail faced "terminal decline", adding that strikes would not solve the dispute but would drive customers away and put small firms in jeopardy just as economy conditions appeared to be improving.

"Strikes are not the way to resolve differences or safeguard the future of our postal services," he said.

Forty-two thousand mail centre staff and drivers will strike tomorrow and 78,000 delivery and collection staff will walk out on Friday, the CWU said last week.

Royal Mail has said it would hire 30,000 temporary staff to help cope with the backlog expected to be created by the strikes and a higher Christmas workload - double the normal seasonal intake and a move that further angered unionised workers.

"An independent third party may well be needed to help the two sides resolve their differences," Lord Mandelson said.