Laying-off news among companies continues to mount especially among tech companies, as well as businesses in interest rate-sensitive industries like finance and housing are also laying off employees. Amazon, Meta, Twitter, Facebook, SWVL, and others have recently announced layoffs news. Over 35,000 tech professionals from 72 different organizations have been dismissed this month with a total number of tech jobs lost this year to 120,000. One reason for such action is that during the pandemic, firms over-hired employees to meet higher demand, but now that the online boom has subsided and offline working has resumed, those new hires appear to be too costly. Another explanation is that the global economic downturn increased production costs and made businesses less willing to invest in digital advertising, which is a major source of income for many tech firms depleting companies’ revenues and financial resources. Another excuse was that “some roles are no longer required” as stated in a memo by Dave Limp, Amazon's senior vice president of devices and services.
Amazon is expected to dismiss 10,000 employees accounting for around 3% of its workforce, as well as, ceased hiring due to the “unusual macro-economic environment”. Twitter reduced its workforce by half laying off around 3700 employees as Twitter was losing more than $4m/ day. Meta, Facebook’s parent company, laid off more than 11,000 employees accounting for 13% of the firm’s staff. As Meta has reported a 4.4% y-o-y decline in revenues and a 52% y-o-y decline in income during Q3. Snap cut 6400 jobs, equivalent to 20% of its workforce, and Robinhood cut 23% of its workforce amounting to 780 employees. Tesla laid 10% of its workers, and Microsoft cut 1000 jobs. For non-tech companies, PepsiCo stated in October that they were cutting expenses to counteract the pressure on profit margins and to weather what seemed to be deteriorating macroeconomic conditions even though the company reported an increase in quarterly sales and profits. Goldman Sachs, also, plans to eliminate several hundred positions, making it the first significant Wall Street company to trim costs in the wake of a decline in deal volume, and the list continues.
Despite the slew of layoffs, Goldman Sachs argued that economic postings in the technology sector are still significantly higher than they were prior to the pandemic and noted that layoffs in the industry traditionally had not been a strong predictor of worsening in the wider labor market. From the data findings, the US labor market remains tight and is showing positive and healthy signs. Nonfarm payrolls recorded 261 thousand jobs in October surpassing the market’s consensus of 200 thousand payrolls. Also, the number of US Initial jobless claims fell by 16,000 to 225,000 on the week ending November 26th even less than the market’s consensus of 235,000. The question here will these white-collar layoffs end up inversely affecting the economy or it won’t affect it as those laid-off employees find their way back into the labor market easily?
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