Threat of strike over jobs hits Royal Mail shares

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Shares in Royal Mail plunged more than 3 per cent last night as investors reacted to the threat of strike action over a major round of job losses.

Unions described Royal Mail's plans to axe 1,600 jobs as "ruthless", coming just months after the newly privatised postal operator reported a first-half profit of £233m.

The first redundancies since the Government part-privatised Royal Mail in October involve 1,600 managers, mostly from its Victoria head office.

The Unite union, which represents 7,000 Royal Mail managers, said it was considering industrial 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," the union's Brian Scott said.

"First the Government sells off Royal Mail on the cheap and now the newly privatised service is ruthlessly sacrificing jobs."

Royal Mail, led by Moya Greene, said it would also create 300 jobs so only 1,300 posts were being axed. It added that no delivery staff were affected.

Almost 50,000 staff have left the company since 2003.

Ms Greene, who earned £1.5m last year, said: "This is the best way to ensure the continued delivery of the universal service."

The 500-year-old postal service only narrowly avoided a strike at Christmas, after reaching a last-minute deal.

The shares closed down 18.5p at 566p.