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

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

The redundancies, which account for 2 per cent of the group’s workforce, will result in the closure of 61 remaining in-store cafes and major changes in management.

About 20 percent of senior management roles are expected to be eliminated. Sainsbury’s He 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 reorganization 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 employers’ National Insurance contributions would rise by 1.2 per cent to 15 per cent from April, while the threshold for tax would drop from £9,100 to £5,000.

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

Sainsbury’s faces a £140mn hit from its budget tax bill. Some of the personnel changes were partly driven by this, according to a person familiar with the decision.

The grocery chain said it was revamping the structure of its central management teams to “support faster decision-making and support execution”, which are held by both Sainsbury’s and Argos.

This will result in fewer head office roles with clear accountability, the company said, adding that the changes will take effect in the coming months.

The business “had to make tough choices about where we could invest and where we needed to do things differently to make our business more efficient and effective,” Roberts said.

Clive Black, head of consumer research at Shore Capital, said Sainsbury’s had announced important measures after the Autumn Budget to manage its cost base to enable continued investment.

“While difficult, such measures are important to us, particularly in the face of the UK government’s massive spending expansion,” he added.