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Workers at newly privatized Royal Mail to strike November 4

By Neil Maidment

LONDON (Reuters) - Workers at Britain's newly privatized Royal Mail postal service voted on Wednesday to strike for 24 hours on November 4 if they cannot reach agreement with the firm on pay and working conditions.

The management of Royal Mail, which listed on the London stock market in a high profile float last week, had expected a vote in favor of strike action and criticized the prospect of a disruption to services in the run-up to Christmas, its busiest time.

The Communication Workers' Union (CWU) sent ballot papers to over 115,000 Royal Mail staff and said 78 percent had voted to strike, on a turnout of 63 percent.

The union said further action was under consideration and added that it planned to carry out a second ballot asking workers to support a boycott of the handling of competitors' mail, which Royal Mail delivers on their behalf.

The CWU, which fiercely opposed the privatization over fears it would lead to poorer job conditions and services, in July rejected Royal Mail's offer of an 8.6 percent pay increase over three years, criticizing proposed changes to pensions.

"What we want is a groundbreaking, long-term, legally binding agreement that not only protects postal workers' job security, pay and pensions but will also determine the strategy, principles and values of how Royal Mail will operate as a private entity," CWU deputy general secretary Dave Ward said in a statement.

Royal Mail noted that, with a 63 percent turnout, 51 percent of all its CWU members had abstained or voted against a strike. It also noted that there were 24,000 frontline employees who were not union members and therefore did not vote.

Shares in the firm, which on Wednesday named Barclays as its corporate broker, closed down 2.9 percent at 475 pence, having been down all day on the expected announcement.

The Direct Marketing Association, representing the UK advertising mail industry - which it says accounts for 1 billion pounds of Royal Mail's 9 billion pound turnover - said strike action would have a severe impact on customers.

"The build-up to Christmas is a critical period that typically accounts for more than half of businesses' annual revenues ... Any disruption to service would quickly lead businesses to take their custom elsewhere," DMA's executive director Chris Combemale said in a statement.

The action comes as many Royal Mail workers have seen the value of their free shares in the firm rocket.

As part the stock market listing, 10 percent of shares were handed to Royal Mail's 150,000 eligible UK-based staff, with full-time workers each receiving 725 shares, worth around 3,440 pounds ($5,500) at Wednesday's closing share price.

That figure was much higher than the 2,200 pounds per person initially expected, after the shares peaked on Tuesday almost 50 percent above the privatization price.

Royal Mail said on Wednesday that directors of the company had applied for a total of more than 500,000 pounds worth of shares in the float as part of an employee priority offer, and like others, saw their order scaled back to 10,000 pounds worth each due to strong demand for the shares.

As well as the shares they bought at the 330 pence offer price, they also received the free shares as staff. Royal Mail said its non-executive directors decided to opt out of receiving these shares as they deemed it inappropriate.

Chairman Donald Brydon owns 3,030 shares, worth nearly 14,400 pounds at Wednesday's closing price, while Chief Executive Moya Greene and Chief Financial Officer Matthew Lester both have 3,643 shares, now worth more than 17,300 pounds.

The jump in the share price has sparked criticism by opposition lawmakers, who accuse the government of undervaluing Royal Mail, prompting a parliamentary committee to say it will investigate the sale in an inquiry expected next month. ($1 = 0.6278 British pounds)

(Additional reporting by Kylie MacLellan, Editing by Kate Holton and Kevin Liffey)

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