Playing the Layoff Card, US Company CEO
"Starting to Act Like the Boss Again"
[Asia Economy Reporter Haeyoung Kwon] #The US asset management firm Vanguard Group ordered its employees at the end of last year to reduce remote work and increase office attendance. It even threatened to fire employees who insisted on working from home and did not comply with the new guidelines within a few weeks. As concerns about an economic recession sweep Wall Street, employees who had enjoyed the comfort of remote work are returning to the office one after another.
"American bosses have started acting like the head again."
The Wall Street Journal (WSJ) reported this in its article dated the 2nd (local time). In recent years, as the US labor market faced a persistent labor shortage, employees who were once in a dominant position ('Gap') have shifted to a subordinate position ('Eul'). Amid recession fears, a domino effect of layoffs is spreading from big tech to other industries, showing a trend where the balance of power between labor and management is shifting back toward companies.
WSJ stated, "Many executives are not trying hard to retain employees. Salary increases are also slowing down," adding, "Executives are streamlining operations, downsizing businesses, and laying off employees."
Looking at recent US employment indicators, it is difficult to definitively say that the labor market will cool down in the future. The indicators are mixed. The unemployment rate in December last year was 3.5%, which is considered full employment. However, signals of employment slowdown are also appearing simultaneously as companies continue layoffs amid recession concerns.
According to Challenger Gray & Christmas, a US recruitment consulting firm, US companies eliminated 102,934 jobs in January this year. This is double the previous month and a 440% increase compared to January 2020, two years ago. This can be seen as a sign of employment slowdown.
Compared to two years ago, employment has already been gradually cooling in some sectors since last year. The tech sector, at the center of the recent employment freeze, laid off 97,171 people last year alone. This is seven times the number in 2021 (12,975). Next, the automotive sector reduced its workforce by 30,912, which is double the number from a year ago (10,469). Following that, healthcare layoffs numbered 30,626, similar to the previous year (31,997), and finance layoffs reached 24,437, more than double the previous year (10,784).
Layoff dominoes centered on big tech companies such as Amazon, Microsoft, and Alphabet are particularly noticeable. Big tech, which expanded during the COVID-19 pandemic, is now undergoing restructuring, putting employees who once held the upper hand at risk of being laid off. Restructuring is also spreading to other industries such as semiconductor company Micron, logistics firm FedEx, and electric vehicle startup Rivian. Market investors hope for a soft landing of the economy this year, but companies are anticipating a high likelihood of recession and plan to continue aggressive cost-cutting measures such as layoffs.
Tim Ryan, Chairman of PricewaterhouseCoopers (PwC) US, conveyed the changed atmosphere, saying, "Some CEOs recently feel, 'I have taken back control.'"
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