Tag: Royal Mail

More than 30,000 postal employees face redundancy over the next 18 months as the Government and Royal Mail finalise details of a ‘phantom’ share scheme, which will give every worker a stake worth up to Pounds 5,000.

The windfalls are expected to make the latest round of redundancies more palatable for the 200,000 workforce. All of the cuts will be voluntary. A similar scale of losses was introduced two years ago.

Redundancies are inevitable because part of the restructuring of Royal Mail will be Pounds 1 billion in cash from the Government, which will be used to install sophisticated sorting machines. The restructuring will also allow Royal Mail to reduce the size of its Pounds 5 billion pension deficit.

Modernisation will mean fewer workers are needed. The job cuts are expected to start in six months to a year after the new machines have been installed and are running efficiently.

Details of the share scheme will be unveiled in the next two weeks and it will resemble the one operated by Unipart. But unlike workers at the Oxford logistics company, who have to buy their shares, Royal Mail staff will initially be given theirs free.

The postal workers, who will own 20 per cent of the business, will be allowed to trade shares twice a year at a price to be set by an independent body.

Royal Mail is to press ahead with a scheme to give “phantom shares” worth up to GBP5,000 to each of its employees after the Government formally vetoed a plan to hand 20 per cent of the organisation to its employees.

The decision, which was announced to a committee of MPs by the Trade and Industry Secretary, Alistair Darling, is a blow to the Royal Mail chairman, Allan Leighton, who had personally promoted the scheme to give equity to its 190,000 employees.

It is unclear what the initial value of the shares will be and it is not thought that Royal Mail will pay a dividend on them. Crucially, they will not carry any voting rights, nor will it be possible to sell them to anyone outside Royal Mail.

Unions welcomed the move as “great news” for postal workers, saying Mr Leighton’s original plan would have been tantamount to back-door privatisation of Royal Mail. “The Government is keeping its manifesto commitment on public ownership of Royal Mail,” Billy Hayes, the general secretary of the Communication Workers Union, said.

However, the Liberal Democrats attacked it as a “cowardly move” which could seriously destabilise the company.

Approval for the phantom share scheme will pave the way for the Government to go ahead with a GBP2bn financial rescue of Royal Mail, which is designed to provide money for investment, fund post office closures and ease the GBP5.6bn deficit in the organisation’s pension fund.