Royal Mail has warned it may cut up to 6,000 jobs by the end of August as it starts consultation on ‘rightsizing’ the business at a time of lower parcel deliveries and industrial action.
Its parent company, International Distributions Services (IDS), says today that Royal Mail has been able to find short-term cost efficiencies that mean it has saved the equivalent of 5,000 full-time equivalent roles by March and 10,000 by the end of August. But it may still need to make between 5,000 and 6,000 redundancies by the end of August. Royal Mail says it will try to avoid compulsory redundancies, but that its legacy voluntary redundancy policy – which offered up to two years pay – is now unaffordable. It also says that it continues to push for talks with the CWU at Acas.
The news came as IDS said in a trading update today that Royal Mail had recorded a first-half operating loss of £219m – down from a profit of £235m a year earlier – and that £70m of that was as a direct result of three days of industrial action. It now expects that full-year adjusted operating losses will come in at about £350m, which includes the effect of eight days of industrial action that have so far taken place or been notified to Royal Mail. The Royal Mail says a further 16 days of strikes have been threatened but not yet formally notified by the Communication Workers Union (CWU) – and that would mean further full-year losses. Royal Mail says in today’s update that its position has deteriorated through a combination of the industrial dispute, macro-economy headwinds and “an inability to deliver the joint productivity improvements agreed with CWU under the Pathway to Change agreement” an warns that this could have an effect on the value of the Royal Mail business.
Royal Mail has previously said it wants to move to a seven-day a week parcel delivery business in response to customer demand, and it has expanded Sunday delivery to all its retail and marketplace seller customers. That means sellers can offer next-day delivery on items ordered on a Saturday. The current dispute centres on a pay offer worth up to 5.5% – with 2% related to performance. Inflation is currently running at 10%.
The news comes a day after about 110,000 postal workers went on strike for the sixth time yesterday. Further strikes have been notified, including for the Black Friday period. CWU general secretary Dave Ward has previously said that Royal Mail management wants to turn the postal service into an “Uber-style employer”. Today he says it is “very difficult to negotiate any settlement to this dispute” because the agenda being pursued by the people at the top of the company would “destroy this business and destroy the jobs of our members.” There was “no prospect” of the CWU agreeing to proposals to employ new starters on 20% lower pay rates with a three-hour longer working week, while “managing out” long-serving employees on existing terms and conditions, he says. He adds: “For businesses and for the public, what they want to do is end daily deliveries. And in relation to parcels, while the CWU wants to capture parcel growth, they want to hive that off into a separate business with self-employed owner-drivers. This is not modernisation. This is asset-stripping and levelling down of the worst sort.”
International Distribution Services says its international GLS division is on track to meet full-year expectations of an adjusted operating profit of between €370m and €410m.
