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Coronavirus: Premier Inn owner Whitbread eyes axing nearly 6,000 jobs

Lianna Brinded
·Head of Yahoo Finance UK
·4-min read
A general view of a Premier Inn sign on May 8, 2018 in Southend on Sea, England. Photo: John Keeble/Getty Images
The company pointed to the end of the government's furlough scheme as a reason for the cuts. Photo: John Keeble/Getty Images

Whitbread (WTB.L), the owner of budget hotel chain Premier Inn, said on Tuesday that it is considering cutting nearly 6,000 jobs in its hotel and restaurant business as the coronavirus pandemic continues to weigh on demand.

The group added in its trading update that the potential job cuts, which represent 18% of its total workforce, is to help mitigate the effects of lower demand from consumers over the short and medium term and that a large amount of the layoffs are expected to be voluntary.

“With demand for travel remaining subdued, we are now having to make some very difficult decisions, and it is with great regret that today we are announcing our intention to enter into a consultation process that could result in up to 6,000 redundancies in the UK, of which it is hoped that a significant proportion can be achieved voluntarily,” said Alison Brittain, CEO of Whitbread.

“In line with our longstanding values of treating our people fairly, our priority is now to ensure that this process is clear and transparent for all colleagues and that everyone impacted is supported throughout.

Premier Inn owner Whitbread to cut 6,000 jobs

READ MORE: TUI aims to reduce costs permanently by 30%

“We will continue to focus on the safety of our guests and teams and the continuity of our business. Maintaining our financial flexibility alongside our leading operating model and powerful brand will allow Whitbread to pursue enhanced long-term structural growth opportunities both in the UK and Germany. This will leave us in a position of strength to continue to invest, increase market share, support our colleagues, guests and suppliers and create value for shareholders.”

The group said in its statement that the job cuts were part of “quick and decisive action to protect the business and to position it for long-term success” and that it is “close to completing a process that will result in a reduction of our head office headcount by approximately 15%-20%.”

Watch: Why job losses have risen despite the economy reopening

UK employers have slashed 695,000 jobs since March when the coronavirus first sent Britain into national lockdown.

Britain’s official unemployment rate also increased, as expected by analysts, to 4.1% between May and July, from 3.9% a month earlier, according to new data from the Office for National Statistics (ONS) published on Tuesday. The claimant count, which includes unemployed and low-paid workers receiving work-related benefits, stood at 2.7 million last month, up 120.8% since March.

READ MORE: UK employers have cut 695,000 jobs since March as unemployment rate rises

The government furlough scheme was intended to help keep employers from sacking staff, by subsidising up to 80% of their wages on the promise that it would not lay off staff. It was optional for the employer on whether they wanted to top up the remaining 20% of wages.

However, the scheme comes to an end in October and many employers have warned that it needs to be extended to save jobs.

On 15 September, Britain’s chancellor Rishi Sunak declared the furlough scheme has “done what it was designed to” and resisted mounting pressure to extend support for hard-hit sectors.

“In line with previous announcements, we expect demand to remain subdued in the short to medium-term and the UK Government's furlough scheme to come to an end in October,” said Whitbred in its statement on Tuesday.

“We have taken the very difficult decision to announce our intention to enter into consultation with our UK hotel and restaurant colleagues on proposals that could result in up to 6,000 redundancies, of which it is hoped that a significant proportion can be achieved voluntarily, along with reductions in contracted hours for a proportion of our colleagues.

“These changes create a more flexible labour model that can adapt with changes in the demand environment going forward. Our priority is to ensure that the process is fair and that impacted colleagues are supported throughout.”