Royal Mail to cut 700 jobs amid growing competition from rivals

(qlmbusinessnews.com via bbc.co.uk – – Tue, 25th Jan 2022) London, UK —

Royal Mail plans to cut around 700 management jobs as it tries to cut costs amid growing competition from rivals.

The move, part of a restructuring plan, comes as the firm faces heavy criticism amid ongoing postal delays.

The company has been struggling to cope with Covid-related staff absences.

Those have led to severe delays in some areas and the regulator, Ofcom, has said it may impose fines where services have fallen short.

Some customers have complained of waiting up to a month for important deliveries, including prescriptions.

Ofcom, the regulator, said recently that is was “concerned about these delays and have made it clear to Royal Mail that it must take steps to improve its performance as the effects of the pandemic subside”.

Large parts of London, Manchester, Hertfordshire, Wales and Scotland, have been particularly affected by the delays.

In early January around 15,000, more than one in 10 of Royal Mail's staff, were off sick or isolating, but Simon Thompson, who took over as chief executive of the delivery firm a year ago, said the situation was now improving.

Mr Thompson said absences had been “a headwind” in delivering productivity targets.Between April and December last year the firm had spent more than £340m on overtime, additional temporary staffing and sick pay, he said.

Analysis: By Dharshini David

Royal Mail has seen deliveries particularly hard hit by staff sickness and absences with the advent of Omicron, with around one in eight staff affected over the Christmas period. But even before that, it had repeatedly failed to meet delivery targets.

With pressure from customers, the regulator and shareholders for more efficient operations, Royal Mail is undertaking an overhaul. And its managers that will bear the brunt.

The company says that losing 700 posts will enable it to streamline its structure and improve local performance and ultimately, save £40m per year. It will now have to consult unions on the proposals.

In the first year of the pandemic Royal Mail saw rising demand for its services as people switched to shopping online at home.

Over the past year, with High Street stores open again, that demand has fallen back, but Royal Mail chairman Keith Williams said the trend for higher numbers of parcels being delivered remained.

The volume of domestic parcels being delivered by Royal Mail between October and December was 33% above pre-pandemic levels in 2019, but 7% lower than in 2020. However the number of letters Royal Mail handled in the October to December period declined in both 2020 and 2021.

“The past few months have demonstrated that the challenge for Royal Mail is to improve both quality and efficiency,” Mr Williams said.

“Looking forwards, the delivery of our transformation and modernisation plans remain incredibly important in light of the fast‐paced change we are seeing and ongoing inflationary pressures.”

Royal Mail said the latest planned job cuts would incur a charge of £70m but would deliver annual savings of around £40m.

The company axed a fifth of its managers – around 2,000 posts – in June 2020, shortly after the start of the pandemic.