Russian Post Announces Plan to Lay Off 33,000

Russian Post on Monday announced plans to lay off 8 percent of its work force next year, becoming the latest in a series of state-owned firms to implement large job cuts.

“Russian Post will continue to optimize its structure and the size of its managing staff in 2010,” Russian Post said in a statement. “The measures planned will result in at least an 8 percent redundancy of staff.”

The state-owned company currently employs 415,000 people, of which up to 33,000 may be laid off. The cuts are aimed at making the company more transparent and efficient, the statement said.

The announcement comes after two other major state-owned employers announced massive job cuts. Sberbank, the country’s largest bank, said earlier this month that it would fire 10 percent of its staff, or 27,000 people, in 2009 and that 20 percent to 25 percent of employees would lose their jobs in the next five years. Russian Railways said in April that it could lay off as many as 53,700 of its 1.2 million workers.

Alexander Kiselyov, former director of Svyazinvest, a state-owned telecommunications giant, took the reins of Russian Post in February and vowed major changes to modernize the company and make it less state-dependent.

Its financial position has materially improved. Earlier this month, the company posted earnings of 69.2 million rubles ($2.4 million) for January through September, up 11 percent compared with the same period last year, Prime-Tass reported. In the first quarter, the state firm saw pretax profits for the first time in three years, and cut its net losses nearly 90 percent to 49.2 million rubles.

Kiselyov, facing a drop in the popularity of traditional mailing services, has focused on developing alternative services, such as EMS Express Delivery.

“So far we’ve seen a major rebranding campaign. … You can even see those vans with EMS Express Delivery labels on their sides across the city,” said Ivan Shatskikh, CEO of UPS CIS. “And it looks like the company is ready to invest in buying new cars, but wants to save some cash by cutting jobs.”

But DHL, TNT, UPS and FedEx dominate the international express delivery market and Russian Post has several Russian competitors on the domestic market so it may be difficult for EMS to make a splash, Shatskikh said.

Russian Post has fallen victim to new technology as people are using traditional mail less often than before, said Luc Jones, a partner at Antal. The company chose a very hard time to lay off people, he said.

“It is always politically extremely hard to fire so many people, so what the Russian government should have done, is to have reformed Russian Post and other similar companies several years ago, when the employees had better chances of finding new jobs,” Jones said.

Russian Post could not be reached for comment.

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