Reuters/London
Just five months after its privatisation, Royal Mail postal service has announced plans to cut a net 1,300 jobs to reduce costs, prompting a threat of industrial action from a trade union.
Royal Mail, sold off last October in Britain’s biggest privatisation for decades, has shed 50,000 jobs in 11 years as it tries to adapt to the rise of electronic mail and a shift from traditional letters to more parcel deliveries.
The group said yesterday it planned to cut 1,600 managerial and head office jobs, offset by the creation of around 300 new or enhanced positions, in order to save an eventual £50mn a year.
The Unite trade union, which represents the majority of those staff to be affected, called the cuts ruthless and said industrial action was an option.
“Unite is demanding a commitment to no compulsory redundancies on fair terms and an effective method for redeployment within the restructured organisation. If Royal Mail refuse we will have no alternative than to consider a ballot for industrial action,” its Royal Mail officer Brian Scott said.
Royal Mail, which employs about 150,000 staff, only narrowly avoided strike action from frontline postal workers at Christmas after agreeing a new deal on pay and terms.
The company, which said the latest cuts would not affect postmen or women, has rarely been out of the headlines since the government sold off part of its stake.
With its shares surging almost 80% above the offer price, opposition lawmakers accused the government of selling the stake off too cheaply and short-changing taxpayers.
The job cuts won the backing of some investors.
“We see this as just another phase in their cost-cutting to evolve the business,” Chris Murphy, UK equity income fund manager at Aviva Investors, a top 20 shareholder in Royal Mail, said.
“We still think it’s a well-run company with strong management and we have faith in what they’re doing.” Cantor Fitzgerald analyst Robin Byde also welcomed the cuts as a necessary step in a restructuring that had further to run, although he was wary of potential industrial action.
“The net job cuts proposed are slightly higher than we had forecast,” he said. “We think that there is risk of industrial action.”
Asked about the reassurances sought by Unite, Royal Mail said it had a track record of achieving change through natural turnover, redeployment and voluntary redundancy where possible. The group said the job cuts would deliver around £25mn of cost savings in 2014-15 and would help it to respond to increasing competition and higher pension charges.
