Thousands of jobs may go in Consignia cuts: Union condemns Slash and Burn as one in 10 staff face axe in postal group's plans to reduce costs by £1.2 billion
THE GUARDIAN 4th October 2001
THOUSANDS OF JOBS MAY GO IN CONSIGNIA CUTS: UNION CONDEMNS ‘SLASH AND BURN’ AS ONE IN 10 STAFF FACE AXE IN POSTAL GROUP’S PLANS TO REDUCE COSTS BY POUNDS 1.2BN
By GEOFF GIBBS
Thousands of jobs may be axed at the postal services group Consignia in a swingeing cost cutting programme condemned last night by unions as a policy of “slash and burn”.
Around one in 10 jobs could disappear in some areas of the Royal Mail and Post Office organisation in plans to cut costs by pounds 1.2bn over the next 18 months. Capital spending programmes are expected to be cut and some parts of the business could be hived off to private companies.
Other savings under consideration include scrapping second deliveries which carry only a small amount of mail but are relatively expensive.
Consignia, formerly the Post Office, said it needed to make the cuts – equivalent to 15% of its total costs – to improve efficiency in the face of new commercial pressures in Britain’s postal services.
As managers began briefing staff about the proposals yesterday morning, the state owned group insisted that no decision had yet been taken on the overall level of job losses.
But the cost cutting exercise, applauded by Postwatch, the consumer watchdog, drew a withering response from Post Office unions which have pledged to fight a “cack handed, panic measure”.
Strike action has not been ruled out. John Keggie, deputy general secretary of the Communication Workers Union, said the government had to ask how a business that was profitable for 20 years before commercial freedom was granted was now in such a financial mess.
“Blaming efficiency levels and the workforce is just not on,” he said last night. “The measures being proposed by the Consignia board can only be described as a ‘slash and burn’ policy. Any attempts to outsource parts of the industry into private hands or to introduce compulsory redundancy will be vigorously opposed.”
Consignia, which employs 200,000 people, said savings achieved by the planned cost cuts would be channelled into the delivery of products to ensure profitability met government targets.
The cuts follow the Post Office’s first operating loss in more than 25 years and come as it prepares to face up to full blown competition in Britain’s postal market.
Figures announced this year showed the group incurred an operating loss of pounds 3m during the 12 months to March as spiralling operating costs outstripped growth in turnover. The group was prevented from ending the year with an overall loss only because of interest received on reserves held by the organisation in the government’s name. That safety net is to be withdrawn.
Despite ending the year in the black, results were pounds 88m below targets that had been agreed with the government.
“What everyone in this organisation has got to realise is that competition is real and is intensifying,” a Consignia spokesman said yesterday. “We have said we want to achieve 15% savings on costs and we will look at both staff and non-staff costs.
“Inevitably it is going to mean job losses -there is no point beating about the bush. But what we don’t know yet is how we are going to achieve these savings, and it does not mean a 15% staff reduction.”
Among savings being looked at by the Consignia board are reductions in the group’s pounds 400m a year capital spending programme, and head office cuts.
Peter Carr, chairman of the Post Office watchdog, Postwatch, said the proposed cuts were inevitable in the light of last year’s operating loss.
He said Consignia management should be commended for having the courage to take tough decisions but rejected suggestions that the opening up of the postal market to competition had been to blame for the collapse in profitability.
End of the road . . . Royal Mail faces big cuts after first Post Office loss in 25 years Photograph: Martin Godwin Copyright 2001 The Guardian. Source: World R
