Coronavirus: Royal Mail to cut 2,000 jobs in Cost Reduction and Restructuring process.


Around 2,000 jobs are being cut at Royal Mail as the group announced a management overhaul to help slash costs.

The postal service said the restructuring plans will see it save £130million in staffing costs next year as it reported a 31 per cent fall in annual profits.

Royal Mail is also cutting £300million in spending over the next two years. It has 9,700 managers, with senior executive and non-operational roles to be hardest hit.

In February 2020, tensions with its workforce and a declining volume of letters increased the risk of its British operations making a loss, the company said. Its shares fell by 11% before recovering to end the day down 5%.

Royal Mail floated in 2013 with a value of £3.3bn, amid criticism that the government had undervalued the company by up to £1bn. The fall in its share price on Thursday means the company is worth £1.8bn.

Rico Back, Fat cat boss the Flying Postman still working from his £2.3million home overlooking Lake Zurich

rico back royal mail
Rico Back quit as Royal Mail chief executive last month. Pic: Royal Mail Group

Rico Back, the chief executive who has faced criticism over his “astronomical” pay packet, said its gloomy financial forecast showed his plan to transform the UK business by 2024 must move ahead.

Hamburg-born Mr Back founded and ran the company’s German arm GLS for almost three decades before taking over as group chief in 2018.

Mr Back – dubbed ‘the Flying Postman’ because he commutes to Britain from Switzerland – attracted criticism for running Royal Mail from his £2.3million home overlooking Lake Zurich during the crisis, having left the UK after the lockdown.

In 2018 investors staged one of the biggest pay revolts in UK corporate history, with nearly three-quarters refusing to support the remuneration package handed to its new chief executive.

The postal service, privatised in a much-criticised process that began in 2013, handed Rico Back an annual deal worth up to £2.7m if he hits bonus targets, on top of a £6m “golden hello” for leaving the company’s European subsidiary.

Trade union bosses labelled the payouts unbelievable, warning that postal workers would be angry at seeing such lavish awards handed out just months after they accepted changes in their pensions to help the company save money.

The company also said in May that costs rose by £40million, driven by overtime and agency resource costs due to coronavirus-related outlays.

Critics had said Mr Back, dubbed ‘the Flying Postman’ because he commutes to Britain, was too far away to effectively run Royal Mail and called for him to resign.

In May Mr Back pledged to invest £1.8bn in a five-year turnaround plan to refashion Royal Mail into an international parcel-led business that could profit from a future dominated by online shopping.

An uneasy relationship between management and workers

Last year, postal workers voted overwhelmingly to back industrial action in a dispute about job security, conditions and alleged bullying.

Three-quarters of the CWU’s 110,000 members voted – 97.1% supported strikes. Royal Mail employs 140,000 people in the UK.

Relations between Royal Mail and the union deteriorated amid disagreement over the implementation of the four pillars agreement, a deal reached between the two parties in 2018.

The four pillars agreement was one of the final acts of the former chief executive, Moya Greene, covering pay rises, pension proposals and moves to reduce working hours from 39 to 35 a week by 2022, subject to productivity improvements.

The CWU said that labour relations have worsened since Greene was succeeded by ‘Rico Back’, who first courted controversy when he picked up a £6m “golden hello” for taking over at the company.

The unions worst fears are relieved the footage of the undercover investigation into ‘Rico Back’s’ European parcels company GLS.

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.

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

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

“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.”

Royal Mail workers have been designated as key workers to keep deliveries going during the pandemic.

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