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J Sainsbury cuts 3,000 jobs as the UK’s second biggest supermarket chain accelerates its cost cuts after the Labor government raised taxes on employers in its October budget.
The layoffs, which represent 2 percent of the group’s workforce, will result from the closure of the remaining 61 cafes and sweeping changes at management level.
Around 20 percent of management positions are expected to be eliminated, Sainsbury’s said Thursday.
The move follows the company’s announcement last year that it would cut costs by £1 billion over the next three years.
The reorganization also comes in what chief executive Simon Roberts called a “particularly challenging cost environment” as retailers struggle with rising costs and taxes.
In October, Chancellor Rachel Reeves announced that the rate of employers’ social security contributions would rise by 1.2 percentage points to 15 percent from April, while the income threshold at which the tax enters in force would be reduced from £9,100 to £5,000.
The minimum wage is also expected to increase, putting further cost pressure on employers.
Sainsbury’s faces a £140m cut to its tax bill from the Budget. Some of the changes to its workforce were partly driven by that, according to a person familiar with the decision.
The grocery chain said it was overhauling the structure of its central management teams “to support faster decision-making and improve performance” at Sainsbury’s and Argos, which is also owned by the group.
This would result in fewer head office positions and clearer accountability, the company said, adding that the changes would take effect in the coming months.
Roberts said the company “has had to make some tough choices about where we can afford to invest and where we need to do things differently to make our business more efficient and effective.”
Clive Black, head of consumer research at Shore Capital, said Sainsbury’s had unveiled “additional, increasingly necessary measures, following the autumn budget, to manage its cost base to enable continued investment”.
“Although very difficult, such measures are necessary for us, particularly in the face of a very considerable expansion in costs funded by the UK government,” he added.