Post Unions fear 20,000-30,000 job losses to cut costs
THE ROYAL Mail last night issued a fresh warning of heavy job losses amongst its 200,000 staff after its parent company Consignia crashed to a pounds 281million loss for the first half of the year.
Neville Bain the Chairman of Consignia said that the escalating losses underlined the urgency of achieving the pounds 1.2billion cost savings announced this summer.
Postal unions fear that the efficiency drive, equivalent to taking 15 per cent out of Consignia’s costs could mean 20,000-30,000 job losses. The results also prompted the consumer watchdog, Postwatch, to demand changes in the company’s leadership.
Consignia blamed the sharp rise in losses on slower growth in mail deliveries which had failed to keep pace with the organisation’s rising costs.
The operating loss for the first six months was pounds 100million – a five- fold increase on the pounds 20million loss recorded in the same period last year. But the post-tax loss came in at pounds 281million compared with a pounds 113million loss last year. This year’s figures included a pounds 201million write-down at Consignia’s troubled Parcelforce business and pounds 20million of redundancy charges.
Parcelforce lost about pounds 50million and the Counters Network of 19,000 Crown and local post offices lost about the same amount.
The Royal Mail which was making profits of pounds 200million a year three years ago only just broke even. The deterioration in its financial performance was blamed on a four per cent rise in costs compared with a growth in mail volumes of only 2.7 per cent. The radical cost reduction measures include selling off Consignia’s vehicle fleet, outsourcing other non-core operations and asking the 12,000 staff of Parcelforce to become self-employed.
Consignia has not ruled out shutting down Parcelforce altogether. Marisa Cassoni, Consignia’s finance director said: “Parcelforce needs to have a much more flexible cost base because that is how the competition operates. If we can’t find a viable alternative for the business there is no way we are going to ask the taxpayer or our customers to pay for it.”
Mr Bain said that Parcel-force would have consumed pounds 200million in cash by the end of this year. “This follows a decade of losses and is a position that we cannot sustain,” he said.
The Communication Workers Union has already raised the threat of a ballot for strike action over the issue of making drivers self-employed.
But a spokesman for Consignia said the company had been given no indication that such a ballot was due to take place. He added: “We have held initial discussions with our unions to discuss the future of our parcels business.”
Consiginia is also conducting a full review of its transport arrangements which is expected to result in a sharp cutback in the amount of mail carried by train and an increase in the use of road and air.
Peter Carr, chairman of consumer watchdog Postwatch, said: “Surely the time has come to review the future of the Consignia leadership following another set of appalling results.”
Copyright: Independent Newspapers(UK) Limited
