Royal Mail looks to shed 16,000 jobs as it aims to cut costs

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Royal Mail plans to cut 16,000 jobs in a move that would unleash further industrial unrest on the battered economy.

The proposed losses — amounting to almost one in ten of the company’s workforce in a drive to reduce the wage bill by £470 million — come as unions also prepare to fight the introduction of a commercial partner to the business.

David Ward, deputy leader of the Communications Workers Union, attacked what he called panic measures. “We are not opposed to modernisation but these are random savings which have not been properly worked out,” he said.

Royal Mail, which employs 170,000 people, has contacted regions around the country asking about interest in redundancy, part-time working and other cost-saving moves.

The Mirror newspaper reported that internal Royal Mail documents stated: “All teams have been given a 10 per cent cash reduction target and so we need to focus not only on where we can deliver an excellent service with fewer roles but also opportunities to spend less cash.”

Further jobs will be at risk later if recommendations by Richard Hooper, a former deputy chairman of Ofcom, are implemented. He has called for a private investor to be allowed to take a stake in the state-owned company and to close half of its 71 mail centres. Unions have warned that the move could result in up to 50,000 job losses.

The CWU is considering severing links with the Labour Party over the plans.

The fresh threat of job losses comes despite record profits, announced last month, of £255 million for the nine months to December 31. This compares with £162 million for the financial year 2007-08. However, that year was hit by some of the worst industrial action for two decades.

The group, which has been criticised in Parliament for failing to modernise quickly enough, said that all its four main operations were in profit for the first time in 20 years. However, it did not provide a breakdown of profits between Royal Mail letters, the Post Office, Parcelforce and GLS, the European parcels business.

It forecast that annual profits would be twice those of the previous year but nevertheless warned that its volumes were falling by more than 7 per cent a year and that competitors continued to gain ground. It also said that the one-price-goes-anywhere universal service was under threat and was still making a loss.

The CWU wants an independent audit of Royal Mail’s finances, accusing it of a lack of transparency. Mr Ward said: “Royal Mail is again giving us mixed messages on its financial health. These results must not come at the cost of cutbacks in services, terms and conditions for staff and post office closures.”

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