Royal Mail is to get rid of 4,000 managers in the coming few months as part of plans by its newCEO to reduce costs and improve efficiency at the UK state-owned postal company, CEP-Research can
reveal.Informed sources close to Royal Mail told CEP-Research that 2,000 managers have left or areleaving on voluntary redundancy terms by the end of the year, with a further 2,000 following inJanuary. This is believed to represent around a quarter of the managerial-level employees at thecompany. Around 60 of the company’s 250 most senior managers are said to be leaving.
The figures are far higher than originally thought. The Unite union, which represents Royal Mailmanagers, last month expressed concerns about a possible 1,500 job losses, of which some, itfeared, would be compulsory.
Royal Mail confirmed that there would be job reductions, but declined to say how many. Aspokesman told CEP-Research: “We are not going to say anything further, because we are still indiscussions with Unite.”
A statement by Royal Mail on 24 October said the company would “continue doing our utmost tomanage any job losses by voluntary means and that we have increased our existing voluntaryredundancy package. These reductions are essential as we continue adapting to our rapidly changingand declining market, where mail volumes have fallen by 16 million letters a day in just fiveyears.”
Unite was unable to respond to questions by CEP-Research at the time of writing.
The redundancy programme is understood to have begun within a month of CEO Moya Greene joiningthe company in July. Sources described the redundancy packages – understood by CEP-Research to beup to two years’ full salary – as “extremely generous”, with one source claiming that the amount ofmoney involved would make Royal Mail’s current financial problems even worse in the short term.
In its half-year trading statement published on 2 November, Royal Mail Group said its operatingprofit fell to £52 million in the six months to the end of September. As mail volumes continued todecline and competition from rival operators and electronic media increased, the group’s letterbusiness moved from operating profit to loss.
Commenting on the results, Greene said: “Royal Mail is implementing a package of measures toraise cash, including reducing headcount, tightening spend with suppliers, and raising proceedsfrom asset sales.”
She added that a huge effort was underway to tackle the group’s heavy underlying negativecashflow, “including a special request to the regulator, Postcomm, for fair bulk business mailprices”. Royal Mail had a £157 million operating loss after exceptional items last financial year,2009-10, on “access” mail – the letters, packets and parcels collected by its rivals but deliveredby Royal Mail, she pointed out.
