Royal Mail bosses want to cut costs by a tenth to help cope with the threat posed by the recession and increased competition, a union said, citing leaked company documents.
The Communication Workers Union (CWU) revealed details of a management review which proposes cuts to working hours, staff numbers, vehicle costs and administration.
Like other postal services around the world, Royal Mail's business has been eroded by e-mail, the Internet and mobile phones. The recession has also eaten away at the amount of mail it delivers, particularly in the key advertising market.
"All teams have been given a 10 per cent cash reduction target and so we need to focus not only on where we can deliver an excellent service with fewer roles, but also opportunities to spend less cash," the leaked document says, according to the CWU. "All costs are being reviewed, including staff, vehicle and administration costs."
With unemployment rising fast and Britain in recession, any job cuts could be politically damaging to Prime Minister Gordon Brown. He has fallen behind in the polls ahead of an election due by May 2010 and some surveys suggest voters are unhappy with his handling of the economic crisis.
Unemployment has reached nearly two million and there are signs of growing unrest among parts of the workforce. Thousands of energy workers walked out last month in a row over the use of foreign workers. CWU deputy general secretary Dave Ward said the 10 per cent savings target was a "panic measure".
"(This) could have a huge impact on both job losses and a reduction of full-time jobs to part-time jobs," he said in a statement. "We are not opposed to modernisation but these are random savings which have not been properly worked out."
Royal Mail confirmed it is trying to cut costs, but refused to comment on the leaked document. A spokesperson denied reports that the proposals would lead to widespread job losses.
"We have no plans for 16,000 job cuts and while we have a cost-cutting programme it is about central costs and overheads and certainly not about our frontline people," she added.
Business Secretary Peter Mandelson said last month the government would press ahead with plans to bring an outside investor into the company to make it more competitive and blow a "gale force of fresh air into the management".
Royal Mail's market share has been hit by greater competition from other companies delivering post and the boom in email.
It saw a four per cent decline in volumes in the first half of 2008-09.
Another problem is its pension scheme which has a £4 billion deficit, up from £2.9 billion last March as a result of falling stock markets.