Five months after signing a new five-year labor deal, averting a massive strike, UPS shared on Tuesday that it will cut 12,000 jobs throughout this year.
The Teamsters in August voted to approve the contract agreement after weeks of labor negotiations that almost led to a strike that would have had a cataclysmic outcome, disrupting the package delivery industry.
UPS, which employs around half a million workers, shared the news during a conference call on Tuesday morning, according to CBS News.
CEO Carol Tome reportedly shared that the round of layoffs will save the company upwards of $1 billion annually. Employees are also being told to return to the office five days a week.
“We are going to fit our organization to our strategy and align our resources against what’s wildly important,” Tome said.
Under the new labor contract, UPS drivers will earn an average of $170,000 in annual pay and benefits by the time the deal is up. It will also create more full-time jobs and secure air conditioning in new trucks, a major concern for the union during negotiations.
Still, the new deal wasn’t enough to save the company from layoffs, as UPS joins the growing list of employers deciding to reduce their head counts, like Google, Microsoft, Macy’s, Wayfair, and more.
The trend comes as the labor market is expected to hit a speed bump this year after 2023 saw a resilient response to tough economic conditions, with the addition of 2.7 million jobs.