The group said Thursday that senior executive and non-operational roles will be hardest hit in the plan to save 330 million pounds ($410 million) over two years, AP reported.
“In recent years, our UK business has not adapted quickly enough to the changes in our marketplace of more parcels and fewer letters,” said Keith Williams, interim executive chairman at Royal Mail Group. “COVID-19 has accelerated those trends, presenting additional challenges.”
The assessment came after the company was unable to take advantage of a massive spike in parcel deliveries during the lockdown as the requirements of social distancing sent costs soaring.
“There has been a too-slow investment in technology and facilities to keep abreast of the huge growth in parcels,” said union official Mike Eatwell.
The company’s share price fell 6.3% in the wake of the announcement and its warning that it could face a revenue hit of up to 600 million pounds if the UK economy contracts by 15% across 2020-21.
Royal Mail said that executive directors and other executives will forgo annual bonuses for 2019-20 and that no shareholder dividends will be paid for the year ahead.
Royal Mail is the latest in a long line of British companies to announce hefty job losses. Others include British Gas owner Centrica, and airlines easyJet and British Airways.
Unemployment in the UK has not spiked as high as in some other countries, notably the United States, largely because of the government’s Coronavirus Job Retention Scheme. It has been paying up to 80% of the salaries of workers retained, up to 2,500 pounds ($3,125) a month. Some 1.1 million employers so far have taken advantage of the scheme to furlough 9.2 million people.
The wage support scheme, however, is set to end this autumn. As a result, there are growing fears that job cuts will increase, raising the unemployment rate from around 4% towards 10%.