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Are Even Tech Jobs Not Safe?




  1. Let’s Talk Numbers


  • On 4th November 2022, Elon Musk announced that Twitter will be cutting 50% of its staff.

  • On 9th November 2022, Meta announced that they will be letting go of around 13% (north of 1,100 employees) of their staff.

  • Microsoft cut 1,000 jobs on 17th October 2022, followed by a recent cut of 10,000 employees in the past few days.

  • Amazon let go of 8,000 employees in the first week of January. Recently 2,300 more employees have gotten a warning notice. It’s a part of their “18,000 Elimination Drive”.

  • Google laid off 12,000 employees on 20th January 2023.

  • Apple is currently the only tech giant to not have announced any job cuts. However, they have put a pause on their hiring.



  1. The Why


  • Technology companies are usually seen as secure jobs since it is a growing and developing area. This makes the chain of layoffs even more concerning to the general public.

  • The reason for this can be traced back to the recovery time after the pandemic.

  • Many potential employees came into the market, and with it so did the hiring in the technology sector.

  • The stocks rose, the demand rose, more goods were sold, and more people were hired. These tech companies were very prone to over-hiring.

  • And what happened when the economy started to cool down? They faced the high costs of labour.

  • It can be seen that the tech companies are trying to present the layoffs as a responsible decision from the administration. To cut out on losses before it gets worse.

  • The job cuts are disproportionately affecting Human Resources and Recruiting employees more. Within programmers too, ones with higher credentials of branded college names are safer than those who went to coding academies.

  • Tech companies are trying to save themselves from this downturn by firing employees due to their over-hiring.



  1. Impact on the Economy


  • We have a loop at hand, companies are letting go of employees when the economy has slowed down, however, that will only cause the economy to take a worse hit.

  • Basic economic models tell us that low unemployment means higher incomes and higher aggregate demand, thus a growing economy. But when we have layoffs in huge numbers the income drops and so does the demand.

  • When the demand drops to a new low, the economy hits the bottom and experiences a recession.

  • In the past few days, news reports have been talking about a potential recession in 2023. Is it because of the tech layoffs? No, but they will add to it.



  1. Future Expectations


  • Presently we can only make smart guesses as to which direction the economy would take.

  • Maybe the layoffs will continue and start affecting other sectors as well. Which will cause a spiral that ends in a recession. If there is a recession, will it be worldwide or local to a few countries? Many can argue that trade and connectivity will cause the entire world economy to be affected.

  • Or maybe the cut-offs will stop and the people will find new jobs. The economy might be slow for some time, but gain pace in the future.


We’ll just have to wait and see…



Sources:


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