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Royal Mail cost-cutting sparks strike action

The walk-out will hamper efforts to drive down people costs, which reached £5.6bn last year
July 5, 2022

Managers at Royal Mail (RMG) will strike later this month over proposed job cuts, as trade union leaders accuse the 500-year-old postal service of “greed and profiteering”, after it brought in a major cost-cutting plan in an effort to shore up profits. 

The Unite trade union said 2,400 managers would work to rule between 15 and 19 July. This involves sticking rigidly to contract terms and not working unpaid hours. Strike action will follow between 20 and 22 July. 

Unite general secretary Sharon Graham said Royal Mail was "awash with cash but it is putting profits and dividends for the few at the top ahead of its duties as a public service". 

“There is not a single aspect of these cuts which is about improving customer service," she said. "They are being driven entirely by a culture of greed and profiteering which has seized a 500-year-old essential service, driving it close to ruin.”

People costs at Royal Mail currently amount to £5.6bn - almost 70 per cent of the group’s total cost base. However, the company hopes to achieve annualised savings of £40mn from “ongoing operational management restructuring”. A trading update in January revealed that around 700 managers would lose their jobs as part this cost-saving scheme. 

Unite said the latest proposed lay-offs followed 1,200 cuts last year and coincided with pay cuts of up £7,000. The company disputed this figure. 

Royal Mail has struggled to modernise since being privatised in 2013. A transformation plan announced in 2019 aims to boost efficiency, but the group is grappling with a fall-off in letter writing and high fixed costs. 

Royal Mail is bound by a ‘universal service obligation’, which means it must deliver to every address in the UK, six days a week, at a uniform price. Unite claimed the proposed job cuts would make the six-day service “impossible to sustain”. 

In a statement the company said there were "no grounds for industrial action", and added that the "vast majority" of managers who had declined voluntary redundancies had seen increased earnings. A spokesperson added that "56 per cent of people have had an increase and others have had their pay protected at their substantive grade". 

In May, Royal Mail said it had agreed on a new set of employment terms for managers with the unions, which would be brought in by the end of that month. This included cutting the number of "managerial layers" from eight to five. "Any industrial action, or the threat of it, would be damaging for our business and undermines the trust of our customers," Royal Mail said at the time.