UK: Post Office to axe 15,000 staff

by Mark Benham and Dick Murray

The Post Office is to axe thousands of jobs in a desperate attempt to keep the struggling company intact.

As many as one in 10 of the workforce - or 15,000 employees - may be cut at Consignia, the new name given by the Post Office. The company faces a "financial crisis" and needs to recover £1.2 billion in its employee cost base over the next 18 months, a confidential Post Office memo sent to all managers states.

It says: "Consignia is facing a financial crisis. We are an £8 billion business which is moving into loss. Our costs are running ahead of income and unless we take drastic action we will fail as a business not just this year but in following years."

The sweeping measures come after the company has reported hugely disappointing profits over the past two years. Its distribution arm, the Royal Mail, faces losing a substantial chunk of its letter delivery business to new rivals after its monopoly on this area was ended earlier this year.

Staff, including 30,000 in London, were told of the massive cuts in management briefings today. The Communication Workers Union attacked the swingeing cuts as " illconceived and destructive" and warned that it would refused to accept any compulsory redundancies.

John Keggie, the CWU's deputy general secretary, said: "Any attempts to outsource parts of the industry into private hands or to introduce compulsory redundancies will be vigorously opposed."

Mr Keggie added: "Blaming efficiency levels and the workforce is just not on and is unacceptable. This is the same workforce that made the Post Office a profitable and successful organisation for over two decades."

The union is to ask the Department of Trade and Industry to investigate the level of the proposed cuts.

Managers are being told that Consignia's executive board has decided that steps must be taken to cut costs "to create a much leaner business".

The devastating two-page memo admits that high levels of inefficiency across the business "are crippling us. We are now living beyond our means and we need to get a grip of this now".

It goes on: "We need to take out 15 per cent of our cost base which equals £1.2 billion. This means reducing our employee and nonemployee costs by 15 per cent. We must do this by March 2003."

A separate confidential briefing note admits "it may well be necessary to invoke some compulsory redundancies".

Managers say that the job losses will mean losing one in 10 people "in some areas over the next 18 months". Consignia will seek to find alternative jobs "but if that's not possible to offer them voluntary severance".

Exactly how and when the cuts will be made and the scale of redundancy payments has not yet been calculated pending discussions with the unions over the next few weeks.

The memo says: "This will not be easy for any of us. In fact it is a challenge which dwarfs anything we've attempted to date."

The memo concludes by warning managers that throughout this difficult time "we mustn't neglect our customers".

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-- Martin Thompson (mthom1927@aol.com), October 03, 2001