Royal Mail axing 2,000 management jobs in coronavirus cost-cutting drive

The group is overhauling its management structure under plans to save £330m over the next two years.

The Royal Mail logo
The Royal Mail logo

Around 2,000 management jobs at being axed at Royal Mail as it looks to slash costs in the face of the coronavirus crisis.

The group said the job cuts come as part of a management overhaul under plans to save £330 million over the next two years.

The cull will affect some of its 9,700 managers, with senior executive and non-operational roles 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 Royal Mail staff.

Keith Williams, interim executive chairman at Royal Mail Group, said the company is taking “immediate action” on costs to offset the Covid-19 impact.

“In recent years, our UK business has not adapted quickly enough to the changes in our marketplace of more parcels and fewer letters,” he said.

“Covid-19 has accelerated those trends, presenting additional challenges.”

On the job cuts, he said: “We are committed to conducting the upcoming consultation process carefully and sensitively.

“We will work closely with our managers and their representatives during this difficult period.”

The job cuts will affect nearly half of Royal Mail’s senior managers, while it will see a 20% reduction in management roles across office functions and 10% drop in frontline operational management.

The firm aims to adopt a “phased approach” to the redundancies but all are set to take place by the end of next March.

Details of the job cuts came as the group posted a 13.6% fall in underlying operating profits to £325 million for the year to March 29.

A 41.2% plunge in earnings at its core Royal Mail division was only partially offset by a 17.5% hike at its international ground-based parcel arm GLS.

Shares fell 6% as the company also warned it could take a revenues hit of up to £600 million if Britain suffers a deep and longer lasting recession caused by the pandemic – a scenario where gross domestic product (GDP) falls by 15% across 2020-21.

It said this would also see it take £155 million of costs related to the crisis and £110 million due to surging numbers of parcel deliveries.

Even in the less gloomy scenario where GDP falls by 10% over 2020-21 and lockdown restrictions continue to ease, Royal Mail still sees a revenues impact of up to £250 million and £250 million in extra costs.

The firm said 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 union official Mike Eatwell said the job losses and cost cutting “deflects attention from where the real problems lie”.

He said: “Poor decision-making at the top of Royal Mail in the past has failed to recognise the pace in the decline in the volume of letters, and there has been a too-slow investment in technology and facilities to keep abreast of the huge growth in parcels.

“This scenario has been made worse by the adverse impact of coronavirus on the economy.”

Royal Mail saw former chief executive Rico Back quit unexpectedly last month after less than two years in the job and battles with unions.

He was replaced on an interim basis by chairman Keith Williams.

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