The Rise of Tech Industry Layoffs
According to Layoffs.fyi nearly 570 tech companies have sacked over 160,000 workers in 2023. A series of layoffs can be seen in the tech industry which has left the employees in turmoil. Amazon had announced to lay off 18000 employees and just a few days after this news there were reports that the e-commerce giant might sack another 9000 employees.
Facebook’s parent company Meta confirmed that it would cut 13% of its global workforce, amounting to 11,000 jobs, the company announced a further 10,000 layoffs. Google’s parent company Alphabet announced it was cutting 12,000 jobs, around 6% of its global workforce. Google-backed Indian startup Share Chat has also decided to lay off 20% workforce. These are only a few examples, many more companies have announced to cut off their already existing workforce and declared no plans to hire new talent for empty positions.
Employee Interest Groups and Labour Laws in Europe
With an increase in layoffs in the tech industry many “employee interest groups” in Europe have been triggered. As per the labor laws “companies are legally required to consult with these councils before executing layoffs, which involves a potentially time-consuming process of data collection, discussions, and the option of appealing”.
Google’s Layoff Strategy
After a series of layoffs, tech giants like Google and Amazon have been reportedly offering their employees up to one year’s salary to voluntarily resign. Companies are targeting senior employees with high salaries and expecting to hire fresh talent at relatively low salaries. Google’s parent company Alphabet has reportedly planned to lay off 500 of its employees out of 8000 strong workforces in the UK. Google has given the provision of confidential severance pay to such employees who opt for voluntary resignation. Alphabet has also offered employees in France a hefty severance package in return for voluntary resignations. Google is planning to terminate over 200 employees in Dublin and Zurich and is also in talks with employee interest groups in Europe to seek aid in their layoff process.
Amazon’s Layoff Strategy
Amazon, on the other hand, is offering a severance package of one year’s salary to senior managers with 5-8 years of experience if they take voluntary resignations. The company is also offering ‘leave to departing employees so their shares can vest and be paid out as bonuses’. Amazon has already laid off around 100 employees in its video game division.
Impact of paid layoffs
With growing competition and financial difficulties due to the COVID-19 pandemic, companies are under pressure to reduce costs and restructure their businesses to streamline their operations. This leads to forced layoffs which is not a good method for a company to stay lean and agile to remain competitive. Thus, this new method of offering employees a substantial amount of money to leave can be advantageous to both sides. The company can reduce costs without forced layoffs and employees can switch to their next role with a financial cushion.
On the other hand, this strategy can also backfire. Employees can start to question their job security, and offering such large payouts can create a sense of unease among remaining employees. Companies might also lose valuable talent as more people might be interested in such paid layoffs. Therefore such layoffs can cause a shortage of workforce. This might also hamper the financials of the company as the amount offered by the companies is high and more employees might be interested in this scheme.
