Entering 2024, the wave of layoffs continues to spread around the world. Many American and European giants have announced layoff plans one after another, affecting a wide range of industries, including technology, finance, manufacturing, retail, e-commerce, media, transportation and other fields. Some analysts pointed out that companies are working hard to cope with economic uncertainty and carry out cost reduction, efficiency improvement, restructuring and integration plans. Large-scale layoffs may continue in the future, and may accelerate industry reshuffle.
The wave of layoffs swept across many countries and industries
This week, many benchmark companies in the industry announced significant layoff plans. Warner Music announced on February 7 that it planned to lay off 600 people, accounting for about 10% of its total employees, to save costs and optimize investment. On the same day, Danish offshore wind power giant Woshu Energy also announced that it would cut 600 to 800 jobs globally and withdraw from the offshore wind power markets in Norway, Spain and Portugal. On February 5, the international beauty giant Estee Lauder announced that it would lay off 3% to 5% of its employees by July, which is expected to affect 1,800 to 3,100 people; the American social media company Snap also announced that it would lay off 10% of its employees globally, or about 500 employees.
This is a microcosm of the recent global layoffs. According to the Associated Press, layoffs will continue in nearly every industry in 2024 as companies adapt to the changing economy.
The technology industry remains one of the hardest hit by layoffs. According to public data from the layoff tracking website Layoffs.fyi, as of February 7, 134 companies in the global technology industry have laid off 33,854 employees in 2024, accounting for 12.9% of the total number of employees in 2023.
The financial industry is also the “main force” in layoffs. In January, Citigroup announced that it would lay off 10% of its workforce, or about 20,000 people. UBS Group AG announced that it will cut 3,000 jobs in Switzerland alone to digest its acquisition of Credit Suisse Bank. Deutsche Bank, Germany’s largest bank, plans to cut 3,500 jobs as part of its cost-cutting plan.
News of layoffs are also coming from the manufacturing and retail sectors. Miele, a century-old German home appliance manufacturer, recently stated that it plans to lay off 2,700 employees due to sluggish demand and rising costs. Chemical giant Bayer announced in January that it would significantly lay off employees in management functions. German auto parts giant Bosch also announced that it will lay off 1,200 employees by 2026. Macy’s, a large American department store chain, plans to cut 2,350 jobs and close 5 stores in the near future to reduce operating costs.
In fact, more and more industries and businesses are experiencing layoff turmoil. E-commerce giant eBay announced that it will lay off about 1,000 full-time employees. United Parcel Service announced that it will lay off 12,000 people and save approximately US$1 billion in costs.
Enterprises reduce costs and increase efficiency to accelerate restructuring
The recent mass layoffs are a continuation of a global wave of layoffs over the past two years. Taken together, the general environment of high interest rates, high inflation, sluggish consumer demand, and internal needs to cut costs and adjust investment structures are the main reasons for companies to lay off employees.
Currently, developed countries are generally facing the coexistence of high inflation and high interest rates, which to a great extent restricts the development of enterprises. The sluggish consumer demand weakens the motivation of enterprises to invest in production and investment, which in turn drags down the cooling of the labor market. The latest data shows that the manufacturing purchasing managers’ index (PMI) of the Eurozone and the United States in January was 46.6 and 49.1 respectively. Although both have increased, they are still in the contraction range for more than ten consecutive months.
On the other hand, the global economy still faces uncertainties such as geopolitical conflicts and commodity price fluctuations, which may increase international trade and supply chain risks, which further weakens market expectations and promotes the spread of corporate layoffs.
Against this background, more and more companies are seeking to reduce costs and increase efficiency, and have launched self-rescue plans to “survive with broken arms”. According to an analysis by the Associated Press, due to the increase in online demand during the epidemic, recruitment in industries such as technology and retail has increased significantly. Now many companies are significantly laying off employees in order to reduce costs and increase profits. In addition, some companies are launching restructuring plans while laying off employees in an attempt to find new growth points. For example, many technology companies have made it clear that they will focus more on innovation and growth areas such as artificial intelligence and cloud computing.
Some analysts pointed out that in the context of continued economic uncertainty and structural changes in some industries, layoffs may become the norm. According to the latest report of the International Labor Organization, the global unemployment rate will rise slightly from 5.1% in 2023 to 5.2% in 2024, and the number of unemployed people will increase from about 189 million to about 191 million. This is mainly due to the expansion of unemployment in developed economies.
However, some analysts believe that the global labor market is still on an upward trend. Al Jazeera analyzed based on the International Labor Organization report that the labor market has shown relative flexibility and “resilience exists amid challenges.” Reuters reported that as the economy becomes more stable and technology spending gradually picks up, the total scale of layoffs is expected to decrease.
Economic development prospects are unclear
The spread of layoffs reflects, to a certain extent, that the global economy is still facing severe challenges. Affected by multiple downward risks, the prospects for global economic recovery still face uncertainty.
Recently, the International Monetary Fund (IMF) raised its global economic growth forecast for 2024, but the forecast value is still lower than the historical average annual growth rate. The IMF report pointed out that the economic growth forecast from 2024 to 2025 is lower than the average level of 3.8% between 2000 and 2019.
IMF chief economist Pierre-Olivier Goulincha said that the global economy continues to show “remarkable” resilience, with inflation falling steadily, growth remaining strong, and the possibility of a “soft landing” increasing. But the pace of economic expansion remains slow.
The OECD also released an economic outlook report this week, raising its global economic growth forecast for 2024 to 2.9% from the previous 2.7%. OECD Secretary-General Coleman said that in the past two years, despite high inflation and fiscal tightening, the global economy has shown resilience and growth has been maintained. Asia is expected to remain the main engine of global economic growth this year and next.
But the report also pointed out that indicators show that economic growth has “slowed down.” The report believes that countries need to remain cautious in their monetary policies to ensure that potential inflationary pressures are under lasting control, and at the same time implement a series of fiscal policy reforms to strengthen the foundation for future economic growth.