Pearson to decimate staff as 4,000 jobs go

Quiet campuses: Pearson said rising employment has meant fewer students enrolling in US colleges

Brian Kersey/AP

21 January 2016

Educational publisher Pearson is to cut 4,000 jobs, or 10% of worldwide workforce, in a bid to return the group to growth.

In the meantime it said profits will be flat at £720 million for last year and fall to around £600 million this year with an upturn to £800 million in 2018.

Part of that fall comes from the sale of the Financial Times and Economist and separation of Penguin, which together accounted for £180 million of operating profit.

But big changes in its top three education markets — the US, UK and South Africa — have knocked £230 million from profits in the last three years, according to chief executive John Fallon.

In Pearson’s biggest market, the US, rising employment has meant lower college enrolments which are now back down to 2008 levels.

In the UK former Education Secretary Michael Gove pushed schools away from the kind of vocational courses provided by Pearson offshoot Edexcel, where enrolments in some areas have halved from the peak.

In South Africa sales of text books, where Pearson has 40% of the market, have declined by 70% on two years ago.

Fallon said: “We need to make sure that every part of Pearson is pulling its weight and generating growth. That means cutting the cost base and focusing on fewer bigger opportunities.”

Around 500 jobs are expected to go in the UK.

Pearson shares rose 53.5p, or 8%, to 711p partly because it committed to continue paying the same dividend for the next couple of years even while its earnings fall.

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