LONDON: Tesco is considering cutting store staff by 39,000 over the next three years as Britain’s biggest supermarket group attempts to reverse a slump in profits.
The potential job losses, revealed in a leaked document, are the equivalent of Tesco shedding one in six employees, either by cutting jobs or reducing hours.
Tesco confirmed the validity of the document but said it had modelled various scenarios and had no plans to announce further job losses.
The group, which employs more than 300,000 people in the UK, cut thousands of jobs last year as its new boss, Dave Lewis, tried to turn around the company’s financial performance.
The retailer reported a £6.4bn pre-tax loss last year, one of the biggest in British corporate history. Tesco’s large out-of-town supermarkets have suffered as British households have changed shopping habits, moving away from buying food in one weekly shop and turning increasingly to convenience stores, online and the discounters Aldi and Lidl.
Tesco is also being investigated by the Serious Fraud Office after a £326m black hole was discovered in its accounts.
The proposals are part of a programme called “Project Pace”, according to the document. An extract was posted on the website verylittlehelps.com, a forum used by Tesco staff.
It says Tesco has modelled the impact of a £500m reduction in the amount it pays in-store staff. This cut would be after recognising the additional cost of introducing the “national living wage”, which means staff over the age of 25 must be paid at least £7.20 an hour from April.
The £500m reduction would lead to roughly 39,000 fewer workers in shops within three years. The document says this is the equivalent of one in six employees either leaving or having their hours cut. This includes large stores in the north of England and Scotland taking a bigger hit than other parts of the country, with contracted staff hours falling by 18%.
Tesco said: “This is not a new programme of job losses, and we are not announcing one. We do not comment on rumours other than to say that we are transforming Tesco into an organisation that meets the needs of customers in a rapidly changing retail sector, and as such continue to plan accordingly.”
Roughly 45,000 people leave Tesco every year through natural wastage, meaning the cuts could be achieved without redundancies if the company chooses to not replace departing employees.
Britain’s big four supermarkets have already cut thousands of jobs in the last year as they adapt to falling sales in their supermarkets. Last year Tesco, Sainsbury’s and Morrisons closed dozens of shops. They have also scrapped new developments, cut head office jobs, removed layers of management within supermarkets and shortened office hours.
In contrast, Aldi and Lidl, the German discounters, are hiring thousands of workers.
Earlier this month Aldi announced it would create 5,000 jobs in the UK this year for the opening of 80 new shops.
The latest market share figures from Kantar show Tesco accounts for 28.5% of grocery spending in the UK, down from 29% a year ago.
However, Aldi and Lidl’s market share grew from a combined 8.4% in 2015 to 9.8%.
