European, US companies continue layoffs amid recession fears

Recession fears arising from interest rate hikes and persistent inflation in Europe and the US have forced companies to restructure, triggering layoffs.

According to data compiled by Anadolu from an International Labor Organization (ILO) report, global employment growth is expected to be only 1% in 2023, less than half the level in 2022.

Global unemployment is projected to rise slightly in 2023, by around 3 million to 208 million, corresponding to a global unemployment rate of 5.8%, ILO said in a report titled World Employment and Social Outlook: Trends 2023 released in January.

Big technology companies began layoffs in a bid to reduce costs, followed by companies from other sectors such as finance, real estate, media, telecom, automotive, and chemical.

While the slowdown that started in the global economy with the COVID-19 period has not waned yet, inflation concerns, rising interest rates, surging energy costs, and geopolitical problems hit production and caused fluctuations in the markets.

As e-commerce boomed during the pandemic, technology companies boosted their recruitment. However, faced with high inflation and rising borrowing costs, technology firms are going through tough times as consumers' purchasing power weakened.

These developments led to a decrease in the sales of large and small-scale companies, pushing them to reduce their workforce.

A surge in interest rates, weak consumer demand, and falling profit rates are forcing major investment banks, along with companies like Amazon, Meta and Google, to cut their workforces, as they did last year.

Job cuts in the US jumped 319% year-on-year in March, according to a report by Chicago-based outplacement firm Challenger, Gray & Christmas, Inc.

US-based employers announced a total of 89,703 job cuts during March, a 15% increase from 77,770 in February.

In the first quarter of this year, employers announced a total of 270,416 cuts, marking the highest first-quarter layoff total since 2020 – the early months of the coronavirus pandemic.

In 2022, employers announced plans to cut 363,824 jobs, up 13% from 2021, another report from Challenger, Gray & Christmas, Inc. showed.

The automotive industry announced the second-most job cuts in 2022 with 30,912, followed by health care/products manufacturers and providers with 30,626 cuts.

According to the website Layoffs.fyi data, more than 168,000 global technology-sector professionals lost their jobs since the start of 2023.

Amazon CEO Andy Jassy announced in March that the company would lay off 9,000 more employees – mostly in AWS, PXT, Advertising, and Twitch – in the coming weeks.

In January, Jassy said the layoffs would affect more than 18,000 employees.

Meta, the owner of Facebook, Instagram, and WhatsApp, announced in March that it plans to lay off 10,000 more employees. Meta announced last November a job cut of 11,000.

Microsoft has announced its plan to lay off 10,000 jobs, roughly 5% of the total by the end of the third quarter.

Google's parent firm Alphabet announced in January that it has decided to cut its workforce by 12,000.

Swedish-based music streaming service Spotify announced a 6% cut in its workforce to bring down costs.

American carmaker Ford plans to cut 3,800 jobs in Europe over the next three years as part of actions to restructure its business in the continent.

Irish-American professional services company Accenture said in March that it is planning to lay off 19,000 employees in the next one and a half years.

American and German software companies IBM and SAP announced in January that they will cut thousands of jobs as they become the latest tech firms reducing workforce due to dwindling income amid a slowdown in the global economy.

US-based multinational tech major IBM said it will reduce around 3,900 jobs, or 1.5% of its workforce, worldwide.

Germany-based enterprise software developer SAP said it is planning to cut 3,000 jobs, or 2.5% of its total workforce, as part of a targeted restructuring program in selected areas of the company.