As a result of “gross mismanagement,” the Communication Workers Union is requesting an urgent meeting with the company’s board to submit an alternative business strategy.
Royal Mail has declared that between 5,000 and 6,000 positions will be eliminated by August of next year.
The postal service’s parent business made the statement in a trading update, attributing it to Royal Mail workers’ industrial action, delays in boosting productivity, and dropping parcel volumes.
A process of “rightsizing consultation” will commence. International Distributions Services plc stated that 5,000 full-time positions will be eliminated by March 2023 and 10,000 by the end of August 2023 to achieve short-term cost reductions.
According to current predictions, around 5,000 to 6,000 layoffs may be necessary by the end of August 2023, the report added.
If 16 days of strikes occur in November and December, the firm warned that more positions may be eliminated. It anticipates that such action would “substantially” raise the company’s annual loss.
To avoid mandatory layoffs, a voluntary redundancy scheme will be offered, but the company has stated that its previous voluntary redundancy policy, which offered up to two years’ pay, is no longer available: “Due to the financial state of the company, our previous voluntary redundancy policy, which offered up to two years’ pay, is now unaffordable.”
The parent business recorded a loss of £219 million for the first half of the current fiscal year, compared to a profit of £235 million for the same period of the previous fiscal year.
Approximately £70 million of this loss was attributable to the “direct negative effects” of three days of industrial action.
Communication Workers Union (CWU) members, who represent Royal Mail employees, were on strike over salary and working conditions.
According to the CWU, the walkout by about 115,000 Royal Mail employees over pay and working conditions is the largest nationwide strike in any sector this year. The strikes are expected to last up to twenty-one days.
CWU general secretary Dave Ward commented on the announcement, stating, “The announcement is the result of gross mismanagement and a failed business agenda of ending daily deliveries, a wholesale leveling-down of the terms, pay, and working conditions of postal workers, and transforming Royal Mail into a gig economy-style parcel courier.
“What the corporation should do is forsake its asset-stripping plan and build its future on the competitive edge it already possesses in its deliveries to 32 million U.S. addresses.”
“The CWU has requested an emergency meeting with the board and will present an alternate business plan at that meeting,”
“This announcement holds postal workers hostage for engaging in legal industrial action against a corporate strategy that is not in the best interests of workers, customers, or the future of Royal Mail. This is not the way to create a business.”
Worldwide Distributions Services also owns GLS, a profitable international logistics company headquartered in Amsterdam.
The parent firm warned that it may separate the businesses to prevent GLS from subsidizing Royal Mail’s losses.
GLS is projected to earn between €370 and €410 million this fiscal year.
“All options remain open to protect the value and prospects of the group, including the separation of the two companies if significant transformation inside Royal Mail is not accomplished,” the trading update stated.
Royal Mail is anticipated to incur a loss of approximately £350 million, excluding voluntary redundancy expenses. If consumers relocate their business elsewhere for extended periods following the first disruption, the amount may climb to approximately £450 million.
