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J Sainsbury is axing 3,000 jobs as the UK’s second-largest supermarket chain accelerates cost-cutting after the Labour government increased taxes on employers in its October Budget.
The redundancies, which amount to 2 per cent of the group’s workforce, will result from the closure of its 61 remaining in-store cafés and sweeping changes at management level.
About 20 per cent of senior management roles are expected to be axed, Sainsbury’s said on Thursday.
The decision follows an announcement by the company last year that it would cut £1bn in costs over the next three years.
The reorganisation also comes amid what chief executive Simon Roberts called “a particularly challenging cost environment” as retailers battle rising costs and taxes.
In October, chancellor Rachel Reeves announced that the rate of employers’ national insurance contributions would rise 1.2 percentage points to 15 per cent from April while the earnings threshold at which the tax kicks in would be reduced from £9,100 to £5,000.
The minimum wage is also set to rise, adding to employers’ cost pressures.
Sainsbury’s is facing a £140mn hit to its tax bill from the Budget. Some of the changes to its workforce were partly driven by this, according to one 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 drive performance” at both Sainsbury’s and Argos, which is also owned by the group.
This would lead to fewer, bigger head office roles with clearer accountability, the company said, adding that the changes would take effect in coming months.
Roberts said the business “had to make 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 “further, increasingly necessary steps post the autumn Budget, to manage its cost base to enable ongoing investment”.
“Whilst very difficult, such steps are necessary to us, especially in the face of very considerable UK government-sourced cost expansion,” he added.
