Royal Mail axes 2,000 managers after failing to deliver on parcels
AROUND 2,000 management jobs are being axed at Royal Mail as it looks to slash costs in the face of the coronavirus crisis.
The group plans to save £330million over the next two years with more than 9,700 senior executive and non-operational roles the hardest hit.
Royal Mail is one of a raft of companies in the UK to announce hefty job losses due to the pandemic, including British Gas owner Centrica and airlines easyJet and British Airways.
Trade union Unite said the job losses are a devastating blow for staff.
Keith Williams, interim executive chairman at Royal Mail Group, said: “Our UK business has not adapted quickly enough to the changes in our marketplace of more parcels and fewer letters.
Recession
“Covid-19 has accelerated those trends, presenting additional challenges.”
On the job cuts, he said: “We are committed to conducting the consultation process sensitively.”
The job cuts will affect nearly half of Royal Mail’s senior managers, while it will see a 20 per cent reduction in management roles across office functions and 10 per cent drop in frontline operational management.
The company wants a phased approach to redundancies but all are set to take place by the end of March next year.
Details of the job cuts came as the group posted a 13.6 per cent fall in underlying operating profits to £325million for the year to March 29. A 41.2 per cent plunge in earnings at its core Royal Mail division was only partially offset by a 17.5 per cent hike at its international ground-based parcel arm GLS.
Shares fell six per cent as the company warned it could take a revenues hit of up to £600million if Britain suffers a deep and long recession – where gross domestic product (GDP) falls 15 per cent in 2020-21.
Even in the less gloomy scenario where GDP falls by 10 per cent over 2020-21 and lockdown restrictions continue to ease, Royal Mail still sees a revenues impact of up to £250million and £250million in extra costs.
Executive directors and Royal Mail executives will forgo annual bonuses for 2019-20 and no shareholder dividends will be paid for the year ahead.
Unite official Mike Eatwell said the job losses and cost cutting “deflects attention from where the real problems lie”.
He said: “Poor decisionmaking at the top of Royal Mail has failed to recognise the pace in the decline in the volume of letters.
“There has also been a too-slow investment in technology and facilities to keep abreast of the huge growth in parcels. This has been made worse by the adverse impact of coronavirus on the economy.”