24/11/2022
The labor market faces a catastrophe! Employers are laying off at a staggering rate, and the number of new offers is falling.... but wait! Is it so? 🤔
Recently, there have been more and more articles in the media threatening recession and unemployment, caused by cuts in personnel spending. Even global giants such as Amazon are said to be reaching for group layoffs. According to the New York Times, up to 10,000 people are expected to lose their jobs there.
However, let's put the emotions aside. Large companies, fueled by the capital of investors expecting certain profitability, have to control financial parameters ruthlessly. If they grow at an insufficient pace, there is no way out - they have to cut costs. However, this is different from the model that we will encounter in most companies. The majority of the business owners are not up against the wall, and they don't have to react to revenue declines with steep cuts in, for example, salaries. Such businesses will cut investments first, and only when necessary will they reach for the financial scalpel. This is particularly true of many domestic companies.
Let's look at Amazon - in its case, the aforementioned 10,000 represent 3 percent of employees working at Amazon's locations and less than 1 percent of the total workforce. Seemingly record layoffs, but let's not forget that the pandemic was a time of unprecedented profits for the company. To make it possible to handle the growing volume of orders, the e-commerce giant had to double its workforce! With such an increase in employment, even a 3% cut in the workforce won't change the fact that the company employs more than 190% of the 2019 state.
Today, it's not challenging to announce pithy news about the labor market if you compare the number of job openings with the same period of 2021, because then, after the Covid-era shutdown, companies began to look for employees on a massive scale - the base effect bows. Huge reductions will occur less frequently than rational restructurings. Many companies will see opportunities here to make long-postponed personnel optimizations. Perhaps some of the workforces will not need to be laid off, but instead, invest in retraining them and placing them in another department. Probably in place of one overpaid specialist, it will be better to hire several with less seniority, but also lower expectations.
The current labor market situation is not armageddon. It is an opportunity.
