Royal Mail plans to cut 700 managerial jobs in a restructuring that has forced it to lower its profit outlook for the year.
The privatised national postal operator said it hoped that the move would ensure an “improved focus on local performance” and would “devolve more accountability and flexibility to frontline operational managers”.
This month Ofcom, which regulates Royal Mail, said it was “concerned” about reported month-long delays of post over Christmas, with some customers not receiving cards sent in mid-December until January. The regulator has ordered Royal Mail to take steps to improve its performance.
Keith Williams, 65, Royal Mail’s chairman, said: “The past few months have demonstrated that the challenge for Royal Mail is to improve both quality and efficiency.”
The Unite union described the job cuts as “unjust” and said that it could ballot for industrial action.
The plan to cut managerial jobs, which is subject to consultation, would deliver an estimated £40 million annual cost saving and a charge of about £70 million in the final quarter of this financial year. In 2020 Royal Mail said that it would lay off 2,000 staff, mostly back-office workers and some front-line managers.
As a result of the £70 million charge, Royal Mail’s UK business expects annual adjusted operating profit of about £430 million.
The group reported its best spring and summer profits last year, driven by soaring demand for home parcel delivery and the success of its expansion into the European and American courier markets. In the three months to December, Royal Mail delivered 439 million parcels. UK parcel volumes declined by 7 per cent year-on-year, but were 33 per cent above their pre-pandemic level. Parcel revenue fell by 4.9 per cent on the previous year but was up 44 per cent on the year before the pandemic began. Covid-19 had resulted in a structural shift, with a permanent step up in domestic parcel volumes, Royal Mail said.
Total revenue was down 2.4 per cent for the three months to December after a rise in volumes around Black Friday proved weaker than expected. Revenue was still 17 per cent higher than in the period in 2019. The company said that its overall revenue performance was broadly in line with its expectations and that it was “at least maintaining” its market share.
Simon Thompson, 55, its chief executive, said: “With the rise of Omicron, absence has been around twice pre-Covid levels, with around 15,000 staff off sick or isolating in early January. Thankfully, this is now improving. We are resolutely focused on addressing these issues which have affected our service in some parts of the country.”
He said that in the year to date Royal Mail had spent more than £340 million on overtime, additional temporary staffing and sick pay, as well as providing targeted support for some offices.