Royal Mail's share price is down 1.5%

The freshly-IPO'd company says the 1,600 job cuts it announced today are part of its 'continued efficiency programme'. Shareholders aren't happy.

by Emma Haslett
Last Updated: 19 Nov 2014

Call us pessimistic, but MT foresees another one of those Christmases where Santa doesn't turn up much: Royal Mail has just announced 1,600 job cuts (1,300 net, because it wants to create 300 'new or enhanced roles'). Predictably, unions haven't taken it very well.

In a statement euphemistically titled 'Continued Efficiency Programme', the company said it would spend about £100m on cutting back-office jobs, pushing its costs for the year up to £230m (originally that figure was expected to be more like £160m). Shareholders weren't impressed: this morning, the company's share price fell 1.5%.

Coming so close to its listing, you can see why shareholders are upset: this sort of thing was supposed to have been resolved before it floated, making for a nice, calm first year of trading - although anyone who seriously thought that would be the case didn't do their homework properly. Spoiler: this won't be the last time Royal Mail has to make job cuts.

Unions, on the other hand, took it as a sign that Royal Mail now only cares about one thing: cash (as opposed to before, when it only dealt in fairy dust...). The company's 'primary reason for existing is now about making profits rather than serving the nation', said Brian Scott, Unite officer for Royal Mail.

Naturally in a time like this, his thoughts turned to strike action.

'Unite is demanding a commitment to no compulsory redundancies on fair terms and an effective method for redeployment within the restructured organisation. If Royal Mail refuse we will have no alternative than to consider a ballot for industrial action.'

Chief executive Moya Greene, on the other hand, deployed weapons-grade management speak.

'We are continuously improving our efficiency, whilst maintaining our high Quality of Service. We need to do so in order to effectively compete in the letters and parcels markets. This is the best way to ensure the continued delivery of the Universal Service and the good quality jobs we provide for our people.'

Whatever that means. On the bright side, this may create an opportunity for investors who didn't get a chance to buy shares during the massively over-subscribed listing to bag a bargain. Don't say we never try to help...

Find this article useful?

Get more great articles like this in your inbox every lunchtime