Friday

Postal workers are being balloted on strike action; pay deals are averageing 3.5%; and there is a question over the Boots takeover.

Around 130,000 postal workers are to be balloted on strikes in a row over pay, threatening the first national walkout in a decade, it was announced today.

The Communication Workers Union rejected a 2.5% offer and agreed a timetable for the ballot, which will start later this month.

The union said the Royal Mail’s business plan would lead to 40,000 job losses, a pay cut for postal workers and the closure of mail centres and delivery offices.

Average pay deals remained at 3.5% in recent months, although one in three settlements is now worth at least 4%, new figures showed today.

The bigger pay rises have reflected higher rates of inflation, said pay analysts Incomes Data Services (IDS).

One in four deals, mainly in private firms, is now worth more than 4.2%, while the lowest settlements are around 3%.

The study of 152 deals, covering more than a million workers, showed a "significant gap" between pay rises in private firms and the public sector.

Ken Mulkearn, of IDS, said: "The rising number of private sector deals at or above 4% is a clear indication of the impact that higher inflation is having on pay negotiations.

"At the same time the median settlement level for the whole economy appears to be holding up, despite the downward pressure on settlement levels in the public sector.

"The median is a central measure, however, and masks the diversity of settlements, with many private sector firms, who have been doing well, reaching settlements that reflect both profitability and the higher inflation environment."

The group set to buy health and beauty giant Alliance Boots is understood to be at loggerheads with the firm’s pension trustees after offering far less than the £400 million demanded upfront, according to a newspaper report today.

US private equity house Kohlberg Kravis Roberts and Boots deputy chairman Stefano Pessina are believed to have put forward plans to pay just £50 million upfront to plug the retail and pharmaceutical giant’s pension deficit.

Boots pension trustees are said to be demanding £400 million paid in cash immediately, with additional payments potentially totalling up to £1 billion.

The buying team said in the scheme of arrangement outlining details of the deal this week that it "recognises the importance of ensuring that the Alliance Boots Pensions Schemes are prudently funded and is working to reach agreement with the trustees on the appropriate levels of funding for these schemes, including by way of additional contributions".

But the dispute could threaten the £11.1 billion deal’s success, with pensions issues increasingly taking centre stage in mergers and acquisitions.

The pound at 12 noon was 1.9796 dollars compared to 1.9823 dollars at the previous close. The euro was 0.6812 pounds compared to 0.6815 pounds at the previous close.

The FTSE-100 index at 12:45pm was down 4.6 at 6519.5.

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