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Royal Mail is looking to cut 700 management jobs following a tough Christmas in which deliveries were disrupted by high levels of sickness absences caused by the spread of the Omicron variant of Covid.
The company said the job cuts across its existing ranks of 8,000 managers will save the business £40 million annually, but will result in a one-off charge of £70m. Full-year operating profit will therefore miss the previous target of £500m, coming in at approximately £430m.
Royal Mail employs 140,000 people, and the management cuts are out of a total of 8,000 managers. A spokeswoman for the company said she did not have any regional breakdown on where the job losses will fall, though about 11,000 of its employees are based in Scotland.
READ MORE: Royal Mail warns of severe Christmas delivery delays
The latest cuts come on the back of other streamlining measures announced in mid-2020 when Royal Mail said it would shed 2,000 head office and senior management posts across areas including IT, finance, marketing and sales.
Approximately 15,000 of its staff were off sick or isolating in early January, equivalent to about 12 per cent of the workforce and double pre-Covid levels. This has led to increased costs and impacted deliveries in some parts of the UK, though absences have begun to reduce to less than 10%.
“The past few months have demonstrated that the challenge for Royal Mail is to improve both quality and efficiency,” chairman Keith Williams said. “Looking forwards, the delivery of our transformation and modernisation plans remain incredibly important in light of the fast-paced change we are seeing and ongoing inflationary pressures.”
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The group handled 439 million parcels during the three months to December, and said it was confident that a “structural shift” has taken place in parcel volumes since the start of the pandemic.
Revenues from domestic parcels were 4.9% down on the same period a year earlier but remained nearly 44% higher than in 2019. Overall revenues in the third quarter were down 2.4% year-on-year, but were up more than 17% compared to 2019.
During the nine months to the end of December, Covid test kits made a “mid-single digit” percentage of total parcel volumes.
Royal Mail said in November that it would return £400m to shareholders via a special dividend and share buy-back programme after posting a pre-tax profit of £311m for the six months to September 26.
