Last August a survey was released by consultant PwC which polled more than 700 U.S. executives and board members across a range of industries. It found that half of respondents said they’re reducing headcount or plan to, and 52 percent had implemented hiring freezes. The projected layoffs were seen to especially hit the high tech and financial sectors, primarily among middle- and lower-management. Since rising interest rates in March resulted in home sales slowing to a crawl, there have also been widespread cuts for realtors, mortgage brokers and appraisers. Unlike blue-collar workers where there is a current shortage of labour, most analysts would agree that this particular round of layoffs will have its greatest impact among white-collar workers.
As of today, forecasted layoffs in significant numbers are happening across the U.S. and Canada. Many are occurring among some of our largest employers, including for example: Meta Platform Inc., Netflix Inc., Shopify, Wayfair Inc., Oracle Corp, and Apple Inc. Walmart Inc., Ford Motor Co., Gap Inc., Zillow Group Inc. and Stanley Black & Decker Inc. also announced they plan to cut jobs at their head offices. Of course, Elon Musk, following his purchase of the company, leads the way with his recent announcement that half of Twitter’s workforce is being dismissed. These are all companies that did well during the pandemic, notably because of the growth in on-line sales and business. However, now that the pandemic is coming to an end and interest rates are rising and stock price valuations are in decline, the boom appears to be over. Thousands upon thousands are being laid off, largely because of massive hiring during the pandemic itself and management’s misreading of the markets.
The layoffs couldn’t have come at a worst time for white-collar workers given that the labour market today is extremely tight, with about 1.9 available jobs for every unemployed person. What is interesting, many CEOs are openly expressing regret by stating that the situation is largely their fault. They obviously recognize that they’ll probably need to hire back some of the talented and skilled people they laid off, and could be positioning themselves to recruit again when the recovery comes. This is being done out of self-interest and to maintain a good product name. At the same time, about two-thirds of firms surveyed are boosting pay or expanding mental-health benefits, largely to retain the remaining workers. The most common move is making remote work permanent for more people. For this reason, many CEOs are trying to appear to initiate the layoffs in as humane way as possible.
Otherwise, just saying you’re sorry is not enough! There will obviously be a need to keep doors open once the economy recovers. One question will be the nature of employment and the workplace down the road. While replacing blue-collar workers with robotics for example is increasingly a concern, the advent of the greater use of artificial intelligence will be an issue for white-collar workers. For example, Deutsche Bank’s CEO John Cryan hinted in 2017 that half its workers could be replaced by machines. According to a survey in the same year by Greenwich Associates, around 75% of financial firms were intending to either explore or implement artificial intelligence technologies. Among Canada’s five big banks, there are artificial intelligence-powered chatbots that now interact with customers through a bank’s digital channels — online, mobile and social media, and programmable software bots perform administrative tasks such as processing mortgage applications. These virtual machines are already being tasked with some heavy lifting.
Otherwise, no one’s job is guaranteed to be safe now or in the future, including many of today’s white-collar jobs. There is little doubt that, as more permanent cost cutting measures occur, companies will be looking to enhance their productivity and lower labour costs through the use of new technologies. There is no profession or field of employment that is safe anymore. The fact that CEOs are currently letting go so many white-collar workers, may also offer them an opportune time to look at new replacement strategies. I wonder if CEOS like Elon Musk will continue to say ‘sorry’?
FROLITICKS 