The Global Wave of Layoffs... From Meta and Tesla to China's Tencent, Staff Reductions Are Inevitable

Meta, Tesla, and Other 'Big Tech' Companies Announce Staff Reductions
Short-Form Sector, a Promising Business Avoiding Chinese Regulatory Crackdown, Also Shrinks
Regardless of Scale or Sector, 'Layoffs and Hiring Freezes' Are Inevitable for Rapid Cost Cuts

[Asia Economy Intern Reporter Kim Se-eun] As the economic recession deepens, a wave of 'workforce reduction' is sweeping across companies worldwide, regardless of country or sector.

According to Layoffs.fyi, a platform that tracks global corporate layoffs, Netflix laid off about 300 employees on the 23rd.

Mark Zuckerberg, CEO of Meta. Photo by Yonhap News

Moreover, many companies have announced plans to reduce hiring in the upcoming recruitment cycles. On the 2nd (local time), major foreign media reported that Mark Zuckerberg, CEO of Meta Platforms (Meta), stated, "We are facing one of the worst economic recessions in history," and sent a message that "the company must reduce staff and resources."

Zuckerberg had previously announced during a weekly employee Q&A session on the 1st that the hiring target for engineers this year would be reduced to 6,000?7,000.

Elon Musk, CEO of Tesla, also revealed workforce reduction plans on the 21st. The reason was, again, the "recession looming over the United States." Speaking at the Qatar Economic Forum hosted by Bloomberg News, Musk explained, "We plan to reduce 3.0?3.5% of the total workforce over the next three months."

Musk recently sent an email titled "Global Hiring Freeze" to executives. According to the content, the company intends to lay off 10% of full-time employees who receive fixed salaries. However, at the same time, the number of part-time workers will be increased, so the actual reduction rate is expected to reach 3.5%.

Logo of Chinese company Tencent. Photo by Tencent

Workforce reductions are becoming a reality not only in the United States but also among leading companies in China.

According to the Wall Street Journal (WSJ) on the 30th, Tencent and ByteDance have laid off thousands of employees to cut costs.

The background includes increased regulatory pressure from Chinese authorities and the economic downturn. Since the end of last year, Chinese IT companies have been conducting layoffs mainly in unprofitable businesses. However, recently, even core business sectors have become targets for workforce reductions.

In particular, Tencent laid off dozens of employees responsible for short-form video services in the 'WeChat' division, known as China's national messenger. The final scale of layoffs is expected to reach at least several hundred. Tencent announced workforce reduction plans citing a small increase in revenue in the first quarter of this year. Additionally, in May, the company notified employees that salary increases would not be possible.

ByteDance, the parent company of the short-form sharing platform TikTok, is also reducing staff in highly anticipated areas. This is due to strong regulations imposed by Chinese authorities on the gaming and education sectors. In May, about half of the employees at a game development studio in Shanghai were laid off, and in early June, the studio was completely dismantled. The education services department is also reducing its workforce by approximately 30,000 employees.

Venture companies that grow based on continuous investment are also facing crises. Especially in biotech, with the increased threshold for returns through IPOs combined with interest rate hikes, investors are maintaining a conservative stance. If this situation continues, workforce reductions and business closures will be the only options.

Experts cite global inflation and sharp stock market declines as causes of the worldwide trend of workforce reductions, which heighten corporate anxiety. They analyze that layoffs are inevitable to effectively reduce costs in the short term.