Uber Technologies Inc. (NYSE: UBER) says in its U.S. Securities and Exchange Commission filing that it will be laying off 3,700 employees or 14% of its global workforce to cut costs and combat losses as the novel coronavirus pandemic savages the ride-hailing industry. The reduction is the first phase of the series of countermeasures Uber planned in the next two weeks.
The 14% reduction of staff would mainly come from support and recruiting. The company will also continue its hiring freeze as 40% out of its 450 driver centers will shut down. Its 180 Greenlight Hub will also be permanently closed due to lower trip volume.
Chief Executive Dara Khosrowshahi also forgoes his salary for the rest of the year as Uber continues to struggle with the impact of the COVID-19 pandemic.
Ride-hailing is one of the most vulnerable businesses affected by stay-at-home orders. Uber’s primary alternative, Lyft, succumb to the losses brought by the pandemic and laid off 1,000 employees or about 17% of its workforce.
Since the start of the widespread shutdowns in the country, Uber’s gross bookings were down in major cities by 70%. In mid-March, Uber suspended its Uber Pool services to contain the spread of the virus, and since then, its gross booking was down by 80%, according to The Information.
“With people taking fewer trips, the unfortunate reality is that there isn’t enough work for many of our front-line customer support employees,” an Uber spokesperson said via The Verge.
Its food delivery service Uber Eats, however, returned gains for the company but was not substantial to compensate big losses in its core product. According to Uber, the layoffs caused by lower trip volumes would incur a roughly $20 million in severance and other termination-related expenses.
Uber and Lyfts’ layoffs are part of the massive job cuts in the private sector — with the Trade, Transportation, and Utilities rallying on a decline of 3.44 million.
Uber stocks are currently at -1.96%, rounding price per stock at $27.52 as of 1:33 p.m. May 6, 2020.