UK Royal Mail shake up costs GBP564m at halfway point

Allan Leighton’s restructuring of Royal Mail has seen the postal group spend Pounds 564 million in redundancy and early retirement payments to date – just halfway through the process.

The payouts have been made as part of a generous redundancy programme, in which managers in the loss-making organisation are being offered sums of between six months’ and a year’s salary, in addition to a lump sum for taking voluntary redundancy or early retirement.

Royal Mail has said that it needs to cut 30,000 jobs from its 220,000 payroll in three years or face bankruptcy.

Observers believe the generous packages have been agreed to mollify the two main postal unions, the Communications Workers Union and the communication workers section of Amicus. So far both unions have complied with the sweeping redundancy programme, which they hope will avoid compulsory layoffs.

Hundreds of managers at Royal Mail are believed to be on gardening leave as part of the chairman’s shake-up, which has seen 16,600 jobs removed through a combination of outsourcing contracts and voluntary redundancies. A spokesman for Royal Mail said last week that there were 120 workers on the payroll that were without designated jobs. Most of these are believed to be staff from the group’s management grades. However, the spokesman added that union suggestions that 240 managers were without a permanent job could be correct.

He said: “It’s a very generous scheme and way above the statutory minimum. But we want to treat indviduals well.”

However, reports that Royal Mail bosses have already seen huge pay rises and stand to collect further large bonuses for turning round the business are likely to put pressure on the unions.

Peter Skite, national secretary for the communications workers’ section of Amicus, said that he was reasonably happy with the progress of the three-year restructuring plan. However, he said that Royal Mail’s board still faced some key hurdles and it should ensure that it consults the unions fully.

He said: “This is the most difficult year and they need agreement on the single delivery, the transport review and automation which are crucial for the future of the business.”

Royal Mail’s managers want to move to a single postal delivery, and trials are already in place for this. However, both unions have yet to agree a deal with the company and are demanding that their members win a five-day week in return.

Mr Skite said: “It’s so far so good: Royal Mail is trying to redeploy as many of its workers as possible.”

However, this has proved significantly easier among blue-collar workers because of the high staff turnover levels that exist in the group. Managers at Royal Mail are finding it hard to secure jobs within the streamlined organisation because of their relatively specialist skills.

Royal Mail’s 25,000 middle and senior managers are set to be hit hardest by a second wave of redundancies, as the group struggles to break even from its current position, where it is losing as much a Pounds 750,000 a day.