Uber’s in trouble because of the pandemic. Thousands of workers will be laid off
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Uber has announced a major staff reduction. 14% of employees will lose their jobs. The coronavirus pandemic has significantly reduced the demand for services provided by the company. This may also have a negative impact on Uber Freight, which entered German and Polish markets last year.
Uber announced on Wednesday that 14% of its workforce, that is, 3,700 full-time employees, will be laid off. The reduction will mainly concern customer service teams and recruitment departments.
Due to the lower number of rides in the transport of persons segment and the current freezing of employment in the company, the company is reducing the number of customer service and recruitment teams,” Uber informed.
Already in March, Uber’s CEO, Dara Khosrowshahi, reported that demand for taxi services in Seattle was falling sharply (by 60%). He expected the same trend in other big American cities. In April, the demand for Uber services fell by 80% worldwide, according to the American service The Information.
“Since we don’t know how long it will take to recover the funds, we are taking steps to adjust our costs to the size of our company today,” the company wrote in a statement.
In addition to the redundancies, General Manager Dara Khosrowshahi will also give up his basic salary up to the end of the year (in 2019 it was $1 million).
It is also known that despite the increase in demand for meal delivery services, Uber Eats decided to abandon 8 unprofitable markets (in the Czech Republic, Egypt, Honduras, Romania, Saudi Arabia, Ukraine and Uruguay).
Uber’s problems resulting from the lack of demand for passenger transport services may prove much more serious for the company’s crawling and loss-making businesses, such as Uber Freight. The Uber’s platform for freight carriers operating in the United States and since last year also in Canada and some European countries (Netherlands, Germany, Austria and Poland) ended 2018 with a loss of $150 million.