Pearson to lose a quarter of its workforce

Latest reduction of 3,000 staff are part of a £300m cost-cutting plan announced in May

John Fallon Pearson
John Fallon, chief executive of Pearson
(Image credit: Robert Marquardt/Getty Images)

Pearson has announced another round of job cuts, taking the total workforce reduction at the world's largest education business to more than a quarter since 2013.

Half-year results revealed the firm is to further reduce its headcount by 3,000 posts, slightly less than ten per cent of its current 32,000 employees, by the end of 2019.

Job losses will be concentrated in back office functions such as human resources, technology and finance in its struggling US college textbooks business.

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The move is "part of £300m cost cutting plan announced in May", says the BBC.

Two previous rounds of cost-cutting in 2013/2014 and 2016 came at a cost of 7,000 posts. Taken together with this latest round, this equates to savings of £950m, says The Guardian.

In total, more than a quarter of the global headcount will have been cut since 2013, when John Fallon took over from long-time chief executive Dame Marjorie Scardino.

Fallon faced calls to resign and a shareholder revolt at the last annual general meeting, when almost 70 per cent of investors abstained or voted against his £1.5m pay package.

Pearson's US business, which accounts for the bulk of its activity, has struggled amid a shift from high-margin textbooks to low-profit online course materials.

It has issued five profit warnings in four years, including cutting £180m from its target for this year. It's reports today revealed a one per cent rise in first-half revenues to £2.05bn, on target to hit the revised total.

However, analysts at Liberum said in a research note: "We continue to believe that another poor year in US higher education publishing will put strains on the business.

"We are sceptical of the view that digital will rise to the rescue with several problems here."

Pearson has sold off non-core, non-education-focused businesses in recent years to raise cash and rationalise its operations, including the Penguin publishing business and the Financial Times.

It also sold 22 per cent of the 47 per cent it owned in Penguin Random House to Germany's Bertelsmann for $1bn (£776m).

Pearson's share price had fallen one per cent to £6.62 by mid-afternoon.

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