US saw 98% surge in layoffs in 2023: Is the worse yet to come?

The United States witnessed a 98 per cent hike in the number of layoffs last year as compared to 2022. As per a new report published by professional outplacement firm Challenger, Gray & Christmas, the US companies planned 721,677 layoffs in 2023, a significant jump from the 363,832 job cuts in 2022. The report also warned that the situation could worsen this year in the wake of the softening of the labour market due to high interest rates and soaring inflation, as per Fox News. What does the report say? Let’s take a closer look. Mass layoffs in the US Technology reported the highest layoffs in the US last year, with the sector shelving 168,032 employees, a 73 per cent rise from the previous year. “The tech sector will continue to be impacted by the onset of AI, mergers and acquisitions, and realigning of resources and talent,” Andy Challenger, senior vice president of Challenger, Gray & Christmas, reportedly said. Retail companies also made for a large chunk of dismissals last year. At least 78,840 people were laid off, a 274 per cent surge in layoffs as compared to 2022. [caption id=“attachment_13646532” align=“alignnone” width=“640”] Retail companies made for a large chunk of dismissals last year. Pixabay (Representational Image)[/caption] According to Challenger, retailers need to “be on their toes” in 2024 despite companies being cautious and flexible in hiring. The healthcare sector and product manufacturers slashed 58,560 positions last year, a 91 per cent rise from layoffs announced in 2022. Tech layoffs in 2023 Tech layoffs were driven by big companies such as Google, Amazon, Microsoft, Yahoo, Meta and Zoom last year. The tech industry saw a total of 259,510 job cuts last year, TechCrunch reported citing layoffs-fyi, a website that tracks layoffs across the world. Besides Big Tech, ShareChat, Spotify, Disney, TikTok parent ByteDance, LinkedIn, Discord, Lyft and Netflix were among the well-known names to have sacked employees in 2023, as per TechCrunch. In the last couple of years, tech companies around the world have shedded over 425,000 jobs. Reason for job cuts As per the Challenger, Gray & Christmas report, the main reason for last year’s downsizing was the worsening market and economic conditions. Last year, the US reeled from high inflation and a sharp uptick in interest rates amid ongoing geopolitical tensions, according to Fox News. Companies also put the onus on the closure of stores, bankruptcy and artificial intelligence (AI) for the job cuts. The report comes on the heels of the US Labor Department stating that the economy added about 2.7 million jobs in 2023, a fall from 4.8 million in 2022. 2024 layoffs TikTok has laid off 60 employees, mostly in its sales and advertising division, this year, as per an NPR report. The layoffs have affected workers in US’ Los Angeles, New York and Austin and abroad. The video-sharing platform has joined major tech companies, including Google and Amazon, that have carried out staff reductions in recent weeks. According to tech job tracker site layoffs.fyi, more than 10,000 layoffs have been reported in the tech industry so far this year. Google has carried out multiple rounds of staff reductions this month. About 100 employees working for Google’s video-sharing platform YouTube will lose their jobs as its partnerships team, which oversees creator management and operations, undergoes restructuring, as per TechCrunch. [caption id=“attachment_13646422” align=“alignnone” width=“640”] Google workers hold signs, including a reference to the company’s “Don’t be evil” code of conduct phrase, at a demonstration against alleged union busting and layoffs risk outside the Kings Cross headquarters in UK’s London, 4 April 2023. Reuters File Photo[/caption] This comes after the tech giant laid off over 1,000 staff across various divisions earlier this month. The company will see more job cuts throughout the year. Google CEO Sundar Pichai told employees in a recent memo that the tech giant has “ambitious goals” in areas such as AI. “The reality is that to create the capacity for this investment, we have to make tough choices,” Pichai wrote, as per a Reuters report. Amazon-owned Twitch fired a third of its staff or about 500 employees. Amazon is planning to lay off “several hundreds” of employees at Prime Video and MGM Studios, according to a memo seen by TechCrunch.  US-based startup Frontdesk, which was founded in 2017, fired its entire 200-person workforce over “a two-minute Google Meet call” in early January. While tech layoffs will continue, Silicon Valley analysts believe the downsizing would be smaller and more targeted than 2023, reported NPR.  “Labor costs are high. Employers are still extremely cautious and in cost-cutting mode heading into 2024, so the hiring process will likely slow for many job-seekers and cuts will continue in the first quarter,” Challenger was quoted as saying by Fox News. With inputs from agencies