The Year 2023 Could See Mass Layoffs as Tech Job Cuts Soar 649 Percent From 2021

US unemployment and inflation rate. Courtesy of Law Ka-chung

Tech companies laid off a large number of employees in 2022, with firms seemingly set to terminate even more employees this year as they plan for an impending economic downturn.

Last year, employers announced plans to cut 363,824 jobs, up 13 percent from 321,970 job cuts announced in 2021, according to a Jan. 5th report from Chicago-based outplacement firm Challenger, Gray & Christmas. Technology accounted for the bulk of the cuts, announcing a total of 97,171 layoffs in 2022, up 649 percent from the prior year’s 12,975.

“The overall economy is still creating jobs, though employers appear to be actively planning for a downturn. Hiring has slowed as companies take a cautious approach entering 2023,” said Andrew Challenger, senior vice president at Challenger, Gray & Christmas.

More layoffs could be coming according to a December survey of 1,000 business leaders by ResumeBuilder.com.

Among respondents, 61 percent said that their organizations will likely see layoffs in 2023. Moreover, 57 percent of those who said layoffs are likely foresee 30 percent or more of their workforce getting affected.

Layoffs were found to be more likely in larger companies employing 500 or more workers, with 74 percent of managers from these companies admitting to potential terminations. In companies employing less than 500 workers, only 51 percent of leaders said there might be layoffs.

Tech Layoffs

On Jan. 4, Amazon CEO Andy Jassy announced plans to terminate 18,000 employees. The cuts, which began last year, were initially set for 10,000 jobs. In November, the company had paused new incremental hiring among its corporate workforce.

HP plans to cut down 6,000 jobs over a period of three years due to falling demand for personal computers. Meta is eliminating 11,000 jobs, accounting for roughly 13 percent of its workforce. The company will extend its hiring-freeze policy through the first quarter of 2023.

Salesforce intends to reduce its workforce by 10 percent. In a regulatory filing on Jan. 4, CEO Marc Benioff said that the firm had hired “too many people” during the COVID-19 pandemic, according to Bloomberg. The business currently employs 80,000 people. Vimeo also plans on reducing its global full-time workforce by 11 percent according to a recent regulatory filing.

Hiring Freezes, Economic Recession

According to ResumeBuilder.com, Stacie Haller, executive recruiter and career counselor, notes that recent layoffs have been driven by the tech sector which is “right-sizing” after over-hiring. The onset of COVID-19 pandemic had boosted business in the sector. However, certain other industries could be experiencing hiring freezes, she said.

“With unknown variables in the workforce regarding not only internal workforce issues but also the changing culture around working today, hiring freezes may be a safer policy for companies to implement before layoffs are needed. With the talk of a recession, this may be what we will see in the coming months,” Haller stated.

The Federal Reserve is already expecting unemployment to rise in 2023 as it keeps raising benchmark interest rates in a bid to bring down high inflationary pressure. There are worries that the Fed’s actions will eventually push the American economy into a recession, thereby raising unemployment.

Meanwhile, America’s private sector added 235,000 jobs in December, according to an ADP report (pdf) on Jan. 5. Annual pay rose by 7.3 percent, which is the largest decline in pay growth for employees in three years.

“The labor market is strong but fragmented, with hiring varying sharply by industry and establishment size,” said Nela Richardson, chief economist at ADP. “Business segments that hired aggressively in the first half of 2022 have slowed hiring and, in some cases, cut jobs in the last month of the year.”