As inflation took hold and interest rates were raised at the start of 2022, the job market was still red hot. Around the world, unemployment rates were at all time lows, participation rates were at all time highs and there were still plenty of job openings. Industry after industry was complaining about labour shortages. It was a sign that businesses were holding up despite the economic headwinds.
That may be starting to change. At least in the big tech industry. This article from Vice has spoken to some of the companies in the ‘layoff industry’ – specialists that help employers navigate the emotional and administrative mass-layoff process – euphemistically labelled ‘outplacement’.
Many of these companies are reporting record number of inquiries, in particular from high-flying tech unicorns. These companies thrived (and hired) in the easy money days of 2020 and 2021. But now, they are turning to focus on bottom-line profitability over top-line revenue growth, and are looking to right-size their headcount as a result.
So far this year, globally, over 100,000 employees have been laid off according to LayoffsTracker.com. One outplacement company suggests that based on their volume of inbound inquiries that number could double.
At this stage, this is a story to watch but not panic about. On one hand, it could be companies just pulling back from some of the excesses of the past couple of years. On the other hand, it could spell broader trouble for some of these unprofitable startups. The next few months will be telling.
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