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Explainer-in-brief: No industry seems to be safe from layoffs

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Amazon has over tripled its profits and reported its highest level of sales since the pandemic-driven online shopping spree.
Amazon has over tripled its profits and reported its highest level of sales since the pandemic-driven online shopping spree. (Photo by David Ryder/Getty Images)

In keeping with the trends of 2022, this year opened with more announcements of layoffs in all kinds of sectors. Corporate law firms in the City have hinted they might follow in their US counterparts’ footsteps and start sacking staff. Amazon has declared it will let more than 18,000 people go. And Goldman Sachs has announced what could be the biggest round of layoffs since the financial crisis.

Given these are all sectors with usually lofty profits, one might wonder what will happen to hospitality, the creative industry and other sectors whose dividends are not as high. 

Companies like Goldman Sachs, and sectors like tech, tend to invest a lot of money into new skilled employees and innovation when times are good, and can be obliged to scale back when times are bad. That’s part of the process. In other words, they live feast to famine, while other sectors such as hospitality tend to favour steady levels of staff and investment and squirrel extra cash away because they know windfalls can be far and few between. 

Tech has been particularly affected because they favour an extreme approach more than other industries. The “move fast and break things” mentality means they hire at record speed. And as we have seen, fire at record speed too. Meta is planning on shedding 11,00 roles, and Twitter – under its idiosyncratic new guard – is already starting to let people go. It’s estimated that the tech industry made more than 150,000 workers redundant last year. These layoffs are happening all at the same time as companies try to find ways to balance out revenues and costs in light of a new fiscal year. 

The scale of these layoffs is concerning and they’re not happening in a vacuum. Fresh GDP figures set to be released on Friday are expected to signal the UK is now in a technical recession – two periods of negative economic growth – and business confidence will follow suit. 

Current hiring plans are at their bleakest since the final months of 2020, when the country was on a brink of a shutdown which would last more than three months. 

Happy Wednesday everyone.