Royal Mail continues to be disrupted by strike action amid an escalating dispute over work, pay and conditions. With no end to the dispute in sight, it is possible that the parent company’s dividend could become a political issue.

The firm, which is owned by International Distributions Services (IDS), last month blamed strikes and falling parcel volumes as it swung to a loss of £127 million for the half-year to September against a profit of £315 million last year.

It also pulled its interim dividend and said a decision on the final dividend would have to wait until May next year, although it warned operating losses could be as high as £450 million.

Royal Mail, like other former government-owned institutions such as BT (BT.A) and British Gas, now part of Centrica (CNA), occupies an awkward space between the public and private sectors.

All three provide a public service but are for-profit organisations with obligations to shareholders which arguably trump their duties to their employees.

In 2021, after parcel volumes soared during the pandemic, Royal Mail paid shareholders £400 million through a special dividend and stock buyback last year, yet its improved staff pay offer has been branded ‘derisory’ by the unions.

To avoid further public embarrassment and pressure from government, there is a chance that International Distributions Services might feel it has no choice but to continuing pausing the dividend until it can appease workers and get operations back on track.

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