Last year, 2023, saw a big jump in job cuts, reaching a whopping 270,416—a staggering 396% more than the year before. The tech industry took a hard hit, losing over 240,000 jobs, marking a 50% increase from the previous year.
The tech world, already facing upheavals in the last two years, is set to continue its challenges in 2024. In just the first four weeks of this year, big players like Meta, Amazon, Microsoft, Google, TikTok, and Salesforce let go of around 25,000 employees. According to Layoffs.fyi, 93 tech companies laid off 24,584 employees in 2024.
Why is this happening in 2024? Here are the reasons behind the ongoing layoffs. We'll explore five major trends shaping the job market this year and take a closer look at which industries are proving resilient in the face of economic challenges. Let's dive in and discover what's happening in the job market.
Five Trends In Layoffs For 2024
1) Post-Pandemic Hiring Spree Fallout
When the pandemic hit, everyone turned to technology. People worked from home, ordered food online, and binge-watched shows from the comfort of their living rooms. Companies made a lot of money with all this online activity, so they hired a bunch of people to keep up with the demand.
But now in 2024, things are a bit tricky. After the pandemic, when the economy slowed down, companies find themselves with too many employees. They need to make some changes to save money, and unfortunately, this often means they have to let some employees go. So, the hiring excitement during the pandemic is now causing problems for companies, and they have to make tough decisions about layoffs.
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2) The Cost-Cutting Dilemma
Spending too much money in 2023 is causing trouble for businesses in 2024. One big reason for this trouble is trying to reduce costs, and that's a major cause for companies letting go of employees. There are different reasons for wanting to cut costs, like not making enough money, facing business losses, or not being able to make things fast enough. It's also about making more money and keeping investors happy.
Investors want businesses to spend less money when they're not making as much. Companies are being careful with how much they spend, choosing to keep more money in their pockets instead of hiring as many people as before. While this cautious approach helps companies save money, it also means a lot of people are losing their jobs in the process. So, it's like companies are being very careful with their money, but it's causing many people to lose their jobs in the industry.
3) Artificial Intelligence (AI) Takeover
The rise of AI is becoming a significant contributor to layoffs. A survey by ResumeBuilder.com found that nearly 70% of employers are laying off workers to save money, and about 40% are doing it by bringing in AI.
As business leaders discuss whether AI is a good thing for job-seekers or if it's making job cuts more common, some companies are already using tools like ChatGPT and Bard to replace human jobs. For instance, a UK telecommunications firm British Telecom, plans to replace a fifth of its 55,000 job cuts with AI.
So, in the coming year, people might face more layoffs because companies are turning to AI to do the work instead of hiring people. It's a trend that's becoming more common, and it's affecting jobs across various industries.
4) Mergers And Buyouts Impacting Jobs
When two companies decide to join forces, it's called a merger. This means they become a new entity, combining their operations. On the flip side, a buyout occurs when one company is bought by another, making it part of the new owner's business through a change in ownership.
During these mergers or buyouts, companies often shake things up. They might change how jobs are organized, what skills they need, or even the names of departments. Unfortunately, this often leads to some employees losing their jobs as the company figures out how many people they still need.
5) Rise In Outsourcing
One big reason why people lose jobs is because companies choose to outsource work. It's like when you decide to ask someone from another place to do a job instead of hiring someone full-time. This is because having full-time employees can be too expensive for many companies.
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So, what they do is send the work to other countries or areas where money is worth less. This way, big companies can save money, and they often hire agencies with workers who are paid less to get the job done. Unfortunately, this way of doing things often leads to job cuts for people in the original company.
Recession-Proof Industries That Stay Strong in Tough Times
Not every industry can avoid job cuts completely, but some have a better track record when times get tough. Let's take a simple look at these recession-resistant industries:
1) Healthcare And Social Assistance
Jobs in healthcare and social assistance offer a more secure haven during economic downturns. Why? Because people don't stop getting sick or needing medical attention, recession or not. These roles are considered essential services that folks require, regardless of the economy's state. The aging population further contributes to the demand for healthcare services. Governments often boost spending on healthcare during tough times to stimulate the economy, providing a safety net for workers in this sector.
2) Retail Trade
In times of economic downturn, people prioritize essential needs, benefiting industries like retail trade. Grocery store sales rise as consumers cut back on dining out, and discount and thrift stores thrive as individuals seek cost-effective alternatives.
3) Food And Accommodation Services
Despite being typically linked to discretionary spending, the accommodation and food services sector is expected to see limited layoffs. The current labor shortage contributes to job security, with the industry rebounding from pandemic-related setbacks.
As we sail through the storm of 2024's financial challenges, many companies are unfortunately having to let go of workers. We've highlighted the main reasons behind these layoffs, such as over-hiring, cost-cutting, and the rise of technology like AI.
The good news is that there are alternatives for company owners before resorting to employee layoffs. They can consider options like offering more unpaid time off, implementing virtual work setups, and trimming unnecessary expenses. These choices might help in preserving jobs and easing the impact of financial challenges.
For employees, it's essential to be aware of recession-resistant industries. These industries, like healthcare, accommodation and food services, and retail trade, historically have lower layoff rates. So, considering opportunities in these sectors could be a smart move for job security during uncertain times.
