Crisis in global economy is fueling a wave of layoffs
Economic uncertainties have forced international companies to take steps to reduce costs. Here are sector-by-sector layoffs in global companies… Rising interest rates in the face of high inflation are slowing economic activity day by day, leading companies, especially in the US and Europe, to decide to reduce their workforce. The struggle of countries with high inflation, coupled with tightened monetary policies, has also brought along concerns of a recession.
As interest rate hikes increase borrowing costs, this situation suppresses consumer demand and business growth, putting economic expansion on a slowing trend.
While policymakers are willing to take the risk of a recession in the face of high inflation, many organizations such as the International Monetary Fund (IMF) and the World Bank have predicted that restrictive monetary policies will decrease the global economic growth rate.
Geopolitical tensions, including the Russia-Ukraine War, have also contributed to the continued high uncertainty in the global economic outlook.
257,000 JOB CUTS IN TECHNOLOGY
Tightening monetary policies in the face of high inflation and ongoing economic uncertainties due to geopolitical tensions have forced international companies to take steps to reduce their costs.
Many international companies began to halt their investments and initiate layoffs as of last year to minimize damage during this process. Particularly in the US and Europe, the list of companies deciding to reduce their workforce has grown this year.
Layoffs in the technology sector, which started the wave of layoffs, spread to various sectors such as manufacturing, retail, financial services, and media.
According to data from Layoffs.fyi, as of December 10, this year, 1,153 technology companies have laid off 256,991 people. Last year, 1,064 technology companies laid off 164,969 people.
Especially noteworthy are some layoff decisions announced by large companies in the US and Europe since the beginning of this year:
GIANTS START LAYOFFS
News of layoffs from major US technology companies has raised concerns about the state of the economy.
Microsoft, one of the major technology companies in the US, announced at the beginning of this year that it would lay off 10,000 employees to align the company’s costs with revenue and customer demand. It was reported that the company would lay off more than 1,000 people in July.
Alphabet, the parent company of Google, announced in January that it would lay off 12,000 employees. Sundar Pichai, CEO of Alphabet, stated that they had experienced a dramatic growth period in the last 2 years but today, the economic reality they face is different. It was also announced in September that Google would lay off hundreds of employees from its global recruitment team.
Meta, the owner of Facebook, Instagram, and WhatsApp, declared “productivity year” for 2023 after announcing in November last year that it would lay off more than 11,000 employees. In April, the company stated that it would lay off another 10,000 employees in the second wave of mass layoffs.
The US e-commerce giant Amazon, which announced a pause in hiring last November due to economic outlook, reported in January that it would lay off 18,000 employees. The company also announced in March that it would lay off another 9,000 employees.
E-commerce site eBay announced plans to lay off 400 people, while video conferencing platform Zoom decided to lay off 1,300 people. Yahoo reduced its workforce by 20%, and CEO Jim Lanzone stated that this decision would be extremely beneficial for the company’s overall profitability.
MASSACRE IN THE FINANCIAL SECTOR
The financial services and banking sector also experienced a wave of layoffs. Most recently, it was reported that Citigroup, one of the large banks in the US, terminated the positions of more than 300 top-level executives as part of its restructuring. It was noted that this number constitutes about 10% of the bank’s employees.
Goldman Sachs, one of the major banks in the US that started layoffs in September last year, announced at the beginning of this year that about 3,200 people would be laid off, accounting for about 6% of the workforce. In May, the bank also laid off about 250 people.
Another major US bank, Morgan Stanley, announced plans to lay off about 3,000 people in the second quarter of this year.
JPMorgan Chase was reported to lay off about 500 people in May. In addition, after the sharp rise in interest rates in the US, First Republic Bank, the third bank to go bankrupt within 2 months, was bought by JPMorgan Chase Bank, resulting in the termination of about 1,000 employees.
Online payment system PayPal announced in January that it would lay off 2,000 employees, accounting for 7% of the workforce. The global investment management company BlackRock laid off 500 employees worldwide.
After announcing in February that it planned to lay off 2,000 people, global consulting firm McKinsey reported in March that it would terminate the employment of 1,400 people.
