Royal Mail could cut up to 10,000 jobs, and the business, which is already losing money, has warned of more layoffs if planned strikes happen. The company is in a dispute with its biggest union, which has sent shares down 10%.
The Communication and Workers Union (CWU), which represents 115,000 Royal Mail (LON:IDSI) postal workers, held strikes in September and early October and has threatened more strikes this month and next after months of failed negotiations over pay and operational changes.
The parent company of Royal Mail, International Distributions Services, said on Friday, “Royal Mail urges the CWU to immediately call off planned strike action and accept our offer of Acas talks to find a quick solution to the current dispute.”
The CWU was upset by its plans from last month to take the pay dispute to arbitration and change its rules.
The holding company said that between 5,000 and 6,000 jobs could be lost by the end of August of next year, and that up to 10,000 jobs could be lost over the course of a year. This includes cuts in overtime, temporary workers, and people who leave on their own.
Dave Ward, the head of the CWU, said on Friday that the announcement makes postal workers feel like they are being held hostage for taking legal action against a business strategy that isn’t good for workers, customers, or the future of Royal Mail.
“The CWU wants the Board to meet as soon as possible, and at that meeting, they will propose an alternative business plan.”
Royal Mail has been working on a plan to change its focus from letters to parcels because the number of letters it sends is going down. The online shopping boom during the pandemic gave it a boost, but it is now dealing with inflationary pressures, a rise in the cost of living, and a drop in the number of parcels it sends.
In the first half of the year, Royal Mail had an adjusted operating loss of 219 million pounds. It is expected that the loss for the whole year will be around 350 million pounds.
That could go up to 450 million pounds in losses this year if customers switch to other providers, and the UK business could lose even more money if more strikes happen over the holidays.
“Because there is still a lot of uncertainty, the Board can’t give a clear outlook for the whole year,” it said.
Shares fell as much as 17% to their lowest level since September 2020.
The company said that GLS, its international distribution network, has been working as expected.
Royal Mail, which used to be the only mail service in Britain, recently changed the name of its parent company from Royal Mail Plc to International Distributions Services.
