Royal Mail set to cut 700 management jobs as it grapples with Omicron sting
Royal Mail has warned against the lingering impact of Omicron this morning as it looks to streamline the business, delivering annual savings of around £40m and incur a charge of £70m.
The move will further simplify operational structures to focus on local performance, and devolve more accountability and flexibility to frontline operational managers, cutting jobs in the process.
It comes after the postal service recognised the ongoing “uncertainty” caused by the pandemic and noted in a statement: “It is not possible to predict how long the operational impacts of Omicron will persist as the operation recovers.”
Absence peaked at around 15,000 in early January due to Omicron, with service levels and efficiencies severely impacted.
Royal Mail chief Simon Thompson explained: “With the rise of Omicron, absence has been around twice pre-COVID levels, with around 15,000 staff off sick or isolating in early January. Thankfully, this is now improving. We are resolutely focussed on addressing these issues which have affected our service in some parts of the country.”
“Year to date we have spent more than £340m on overtime, additional temporary staffing and sick pay, as well as providing targeted support for the offices most impacted. We have taken steps to maintain as comprehensive a service as possible, whilst keeping our people and customers safe.”
“We have today entered into formal consultation on a management reorganisation to further streamline our operations and, at the same time, improve focus on local performance.”
Keith Williams, Chair, added: “The past few months have demonstrated that the challenge for Royal Mail is to improve both quality and efficiency. Looking forwards, the delivery of our transformation and modernisation plans remain incredibly important in light of the fast-paced change we are seeing and ongoing inflationary pressures.”
Not all bad news for Royal Mail…
Despite these challenges, overall performance remains in line with previous guidance of around £500m adjusted operating profit for the full year 2021-22, including the restructuring charge of £70m, guidance is now around £430 million adjusted operating profit.
Third quarter results were in line with expectations, with 439 million parcels handled during this period.
Domestic parcel revenue grew by 43.9 per cent, compared to the same period in 2019-20, and declined by 4.9 per cent year on year. Volumes grew by 33 per cent compared to third quarter 2019-20, and declined by seven per cent year on year.
The postal service is now focused on transformation and efficiency plans to mitigate expected cost pressures and sustain profitability, with around £220 million of savings now identified.