World Economy

Radical Job Cuts

Radical Job CutsRadical Job Cuts

German energy giant RWE has announced that it will cut thousands of jobs at British subsidiary npower, after the group posted an “extremely disappointing performance” in 2015.

Npower reported an annual loss of €137 million for 2015 ($151 million), compared with a profit of €227 million for 2014, DW reported.

In response to the nosedive in earnings, Germany’s second-largest utility company announced a new cost-cutting drive which will include the loss of around 2,400 jobs at its British offshoot—or around one-fifth of its UK workforce.

“By 2018, around 2,400 fewer people will support npower overall through a mix of those who work directly and indirectly for npower,” confirmed Paul Coffey, the group’s CEO, on Tuesday.

Npower has already said that there will be no job cuts at any of the division’s power stations.

Npower has been on the receiving end of thousands of customer complaints over billing issues, and lost 351,000, or more than 6% of its UK gas customers in 2015.

Parent company RWE has already warned that those billing issues will likely persist in 2016, which will also hit the German company hard: With around 5.2 million customers, Great Britain is RWE ‘s second most important market after its home country.

Business is suffering at RWE, too. It announced a €637 million annual group loss for 2015, compared with a profit of €2.2 billion profit a year earlier.

The group’s difficulties reflect a broader pain felt by Germany’s conventional energy industry as the country seeks to transition from fossil fuels, such as nuclear and coal, to renewables, including solar and wind.

Traditional providers have complained that the cost of having to close down their nuclear power plants and the generous subsidies afforded their renewable energy rivals have left them bleeding.