25th Mar 2014 08:05
LONDON (Alliance News) - Royal Mail PLC said Tuesday it will commence a formal consultation with unions Unite and Communication Workers Union with a proposal to cut 1,600 jobs and create approximately 300 new or enhanced roles as part of its continued efficiency programme.
The recently listed postal company said that no frontline staff, i.e. postmen and women, would be affected by the net staff reduction, nor would the services Royal Mail provides to its customers. The cuts will rather affect the Group's operational and head office managerial population, it said.
The headcount reduction is slated to deliver annualised cost savings of around GBP50 million, of which approximately GBP25 million will be realised in 2014-15, said Royal Mail, adding that it expects no impact on expected cumulative cash investment during 2013-14 and 2014-15, which remains at around GBP1.2 billion.
Royal Mail said the charge of around GBP100 million associated with its efficiency programme will be recognised in transformation costs, resulting in a total charge of around GBP230 million for 2013-14.
The company, which listed in the autumn last year, will today begin discussions with Unite and CWU over the proposed job reductions. "Royal Mail is committed to conducting this consultation carefully and sensitively. The Group has a strong track record of achieving change through natural turnover, redeployment and voluntary redundancy wherever possible.GLS, Royal Mail's European, ground-based parcels delivery company, is not impacted," the firm said in a statement.
In February, Royal Mail employees accepted a pay increase of about 9% over the next three years plus guarantees over some rights and protections in return for agreeing to curbs to their rights to strike. The deal was agreed by members of the CWU, which represents 139,000 workers at the firm.
The agreed worker protection included a pledge by the company not to introduce zero hour contracts, to continue with the current model of employing mostly full-time staff, and to continue with its restructuring programme without turning to compulsory redundancies.
The agreement followed strike threats in October last year over pay, better terms and conditions and job protection, with the action being called off as the two sides made progress in agreeing a deal.
Moya Greene, Chief Executive of Royal Mail said Tuesday, "We are continuously improving our efficiency, whilst maintaining our high Quality of Service. We need to do so in order to effectively compete in the letters and parcels markets. This is the best way to ensure the continued delivery of the Universal Service and the good quality jobs we provide for our people."
Looking ahead, the firm said, "the underlying trends for the full year are expected to be broadly in line with those seen in the first half."
On reporting its nine month results in January, Royal Mail recorded a 2% increase in like-for-like revenues, driven by growth in its parcels revenues, but parcel revenue growth actually slowed in the third quarter which contains Christmas.
Shares in Royal Mail were trading down 0.91% at 577.165 pence per share at the market open Tuesday, the biggest decliner on the FTSE 100.
By Alice Attwood; [email protected]; @AliceAtAlliance
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