Sainsbury’s to cut 3,000 jobs as rising costs hit business

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J Sainsbury is to cut 3,000 jobs as Britain’s second-biggest supermarket chain accelerates cost-cutting after the Labor government increased taxes on employers in the October budget.

The cuts, which amount to 2 per cent of the group’s workforce, will come from the closure of the remaining 61 in-store cafes and huge management changes.

It is expected that about 20 percent of senior management positions will be lost. Sainsbury’s said on Thursday.

The decision follows the company’s announcement last year that it would cut £1bn of costs over the next three years.

The restructuring also comes amid what chief executive Simon Roberts called a “particularly challenging cost environment” with retailers grappling with rising costs and taxes.

In October, Chancellor Rachel Reeves announced that the rate of employers’ National Insurance contributions would rise by 1.2 percentage points to 15 per cent from April, while the income threshold at which tax kicks in would drop from £9,100 to £5,000.

The minimum wage is also set to rise, adding to the cost pressure on employers.

Sainsbury’s is facing a tax bill of £140m over budget, with some of the workforce changes due in part to this, 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 performance” at both Sainsbury’s and Argos, which is also owned by the group.

This will lead to fewer, larger head office roles with clearer accountability, the company said, adding that the changes will take effect in the coming months.

Roberts said the business “had to make tough choices about where we can afford to invest and where we need to do our business differently to be more efficient and effective”.

Clive Black, head of consumer research at Shore Capital, said Sainsbury’s had introduced “further, increasingly necessary steps after the Autumn Budget to manage its cost base to enable continued investment”.

“Although very difficult, such steps are necessary for us, especially in the face of a significant expansion of spending by the UK government,” he added.