Yahoo Finance Royal Mail faces union battle over plans to cut 700 jobs
Royal Mail faces a clash with union bosses over plans to cull management bureaucracy and red tape that has blighted the postal monopoly since its privatisation almost a decade ago.
The FTSE 100 company will cut up to 700 managers’ roles as part of a masterplan to regain lost ground against more nimble tech-based delivery firms such as Amazon.
Shares in Royal Mail jumped more than 4pc as City investors were buoyed by the proposals, which would save the business £40m a year, before closing 1.2pc higher at 441.7p.
Simon Thompson, the former Ocado and Morrisons director who became Royal Mail chief executive a year ago, said that the job cuts were about cutting bureaucracy that was a legacy of its days as a nationalised company.
“What we have learnt is that smaller teams are better. They are better for quality, they are better for cost. They are also better for trusted relationships,” he said.
“So what we are doing is simplifying our overall organisation. Instead of having multiple layers of frontline management, we are simplifying it into one.”
But Mr Thompson is facing a backlash from union leaders. Gary Sassoon-Hales from Unite said: “We are appalled with the announcement today.”
The union’s general secretary, Sharon Graham, added: “Unite will be giving maximum support to our members in fighting these unjust job cuts and this includes the possibility of an industrial action ballot. Now is the time for the top executives to reconsider their proposals.”
Mr Thompson, who also previously worked for Apple and is on Coca-Cola's digital advisory board, insisted that the cuts were a continuation of already agreed proposals with Unite and the Communication Workers Union to remove 1.2m working hours from the business.
“Ourselves and our unions are totally sticking with our agreements. I am delighted that that’s the case,” he said.
“As we have gone along this journey, we have had a lot of informal conversations with Unite already to get us to this point. But it is worth bearing in mind that it is a consultation. So we will see what it is that comes.”
Royal Mail was controversially privatised in 2013 and floated on the London Stock Exchange under then business secretary Sir Vince Cable.
The public debut was at the time the most popular on record, but shares have sunk as bosses have struggled from union resistance to modernise the postal monopoly.
Over the past 18 months, however, tensions have cooled after chairman Keith Williams, the former British Airways chief, struck a deal with union leaders to cut costs and change working practices.
Royal Mail shares have risen by more than 250pc since April 2020 on the back of better labour relations.
Daniel Kretinsky, the so-called Czech sphinx, has been one of the biggest beneficiaries. He began stake-building two years ago and is now Royal Mail’s largest investor with a 19pc shareholding worth more than £800m.
