Jane Fraser, CEO at Citigroup/ Photo by World Economic Forum/ CC BY-NC-SA 4.0
Major companies, such as Google, Amazon, Citigroup and BlackRock, have announced significant layoffs within their firms, contributing to the overall reduction of the white-collar workforce.
The ongoing job cuts are being driven by a combination of continued economic uncertainty, the ascension of artificial intelligence and rightsizing companies as a result of pandemic-fueled hiring sprees. These trends reflect the broader challenges and unease shaping the job market, particularly in the white-collar sector.
In January so far, 58 tech companies have laid off a combined 7,785 workers, according to Layoffs.fyi, as they look to refocus their operations and—in some cases—devote resources to AI-based projects.
The layoffs are a continuation of the previous year’s strategic belt-tightening measures. In 2023, companies laid off over 260,000 workers in the tech sector alone.
The long-term effects of these downsizings on employee morale, particularly for middle managers, are expected to persist, further contributing to job insecurity. According to a recent survey by MyPerfectResume, 85% of workers are worried that they will lose their jobs in 2024. The data underscores the sentiments of white-collar workers, as companies navigate evolving economic conditions and workforce dynamics.
Why This Is Happening
Companies are playing it careful by reducing their headcount and minimizing costs, suggesting that the era of white-collar job cuts is far from over. The ongoing reduction in workforce size suggests that companies are still grappling with tough economic conditions, such as high interest rates, and preparing for potential turbulence ahead.
Generative AI
With the ascendancy of AI and other emerging technologies impacting the workforce, major corporations are harnessing these tech tools to streamline operations and cut costs.
Automation is already being deployed heavily in the workplace today. Seventy-eight percent of C-suite leaders have reported that their company actively uses generative AI, according to a survey by UKG, a human resources and workforce technology company.
Moreover, 71% of executives say their organization plans to prioritize increasing or advancing their use of AI, a competitive advantage they admit (49%) has been more beneficial to their businesses than employees.
Global investment bank Goldman Sachs published a report last year that estimates 300 million jobs could be lost or diminished by this fast-growing technology.
This week, PwC’s 27th Annual Global CEO Survey revealed that 25% of chief executives expect to “reduce headcount by at least 5% in 2024 due to generative AI.” However, the management consulting giant reported that business leaders plan to offset these layoffs with hiring in other areas.
According to the data, “although 14% of technology CEOs anticipate reducing headcount in the next year due to generative AI, 56% of them also anticipate hiring in 2024—at a rate almost 20 percentage points higher than the global average in our survey. (Overall, 39% of CEOs expect their company’s headcount to increase by 5% or more in the coming 12 months.)”
Overhiring During The Pandemic
Corporations are also trimming the fat as a result of the overhiring that took place during the pandemic to align with evolving business needs and economic conditions.
In 2020, widespread pandemic lockdowns made people turn toward the internet and software applications. Students and workers were forced to adopt remote work styles. The pivot to going online was a field day for big tech companies, especially as small businesses were closed and people didn’t want to leave their homes. As profits soared, companies expanded their workforces to meet demands.
The war for talent during the Great Resignation pushed businesses to hire and retain workers, even if they didn’t meet all necessary job requirements. Managers realized that if they didn’t recruit and onboard people quickly, they’d lose out to their competitors. Flush with cheap and accessible capital, while also confronting a continual war for talent, companies hoarded workers when they had the opportunity.
With the Federal Reserve turning off the spigot, the voracious hiring rate was no longer sustainable.
Source: Forbes
