The new CEO aims to boost growth by reducing office roles, with major impacts expected in London and Rotterdam.

Unilever plans to cut around a third of all office roles in Europe by the end of 2025 as part of its “productivity programme.” This decision follows pressure from shareholders, including activist investor Nelson Peltz. The cuts, which will affect 3,200 out of 10,000 to 11,000 office-based staff, aim to enhance growth and streamline operations. The company has faced employee backlash, and a consultation process is underway to determine the exact locations of the cuts. This move aligns with a broader global reduction of 7,500 roles announced in March.

Main Text: Unilever, the consumer goods giant behind brands like Hellmann’s mayonnaise and Dove soap, plans to cut approximately 3,200 office jobs in Europe by the end of 2025. This reduction represents about a third of its office-based workforce in the region. The announcement was made during a company-wide call, according to the Financial Times.

The job cuts are part of Unilever’s broader “productivity programme” first announced in March, which aims to reduce 7,500 roles globally. The programme is a response to mounting pressure from shareholders, particularly activist investor Nelson Peltz, who have demanded stronger growth from the FTSE 100 company.

Employee Impact and Consultation: Unilever employs between 10,000 and 11,000 office-based staff in Europe. During the video call, Constantina Tribou, Chief Human Resources Officer, stated that the job cuts would primarily target office-based roles, sparing factory jobs. The exact distribution of job cuts across Europe is yet to be determined, with consultations starting soon.

Hermann Soggeberg, Chair of Unilever’s European Works Council, indicated that almost all European office locations would be affected, especially corporate centres in London and Rotterdam. The announcement has caused significant distress among employees, with many expressing their dissatisfaction during the call’s live Q&A session.

Leadership and Shareholder Pressure: Hein Schumacher, who became CEO a year ago, is under significant pressure to revitalize Unilever’s growth after years of underperformance. This restructuring is seen as a critical step in his strategy. Unilever’s shares have rallied since the restructuring announcement, closing up 0.6% to £44.31 on Friday.

Strategic Changes: In March, Unilever also announced plans to spin off its ice cream division, which accounts for 16% of group sales but has lagged behind other faster-growing categories like beauty and wellbeing. This spin-off is part of the company’s broader efforts to streamline operations and focus on more profitable segments.

Analyst and Stakeholder Reactions: Analyst Bruno Monteyne noted that cost-cutting is common across the consumer goods sector, but the scale of Unilever’s cuts could disrupt its turnaround efforts. The company has traditionally valued employee morale, which may suffer due to these reductions.

Soggeberg emphasized the importance of the consultation process to minimize job losses and reassigned some employees to the new ice cream business. Despite the significant anxiety caused by the proposed cuts, Unilever has committed to supporting affected employees throughout the transition.

Conclusion: Unilever’s planned job cuts in Europe are a critical part of its strategy to enhance growth and respond to shareholder demands. While the move has caused significant unrest among employees, the company is proceeding with consultations to determine the best path forward. As Unilever navigates this major restructuring, the focus remains on creating a leaner, more accountable organization.

Analysis:

Political Perspective:

Unilever’s restructuring reflects broader trends in corporate governance, where activist investors exert significant influence over company strategy. Policymakers and regulators will need to consider the impact of such investor pressures on employment and economic stability, particularly in regions heavily affected by corporate downsizing.

Social Perspective:

The planned job cuts highlight the tension between corporate profitability and employee well-being. Unilever’s commitment to supporting affected employees will be crucial in maintaining its reputation as an employer that values its workforce. Social safety nets and retraining programs will also play a critical role in helping displaced workers transition to new roles.

Economic Perspective:

From an economic standpoint, Unilever’s restructuring aims to improve efficiency and competitiveness. However, the immediate job losses could have negative ripple effects on local economies, particularly in regions where the company has a significant presence. Balancing short-term economic disruption with long-term growth potential will be a key challenge for Unilever and its stakeholders.