Job Cuts Hit Amazon, Tightens Belt With Layoffs In AWS And HR Departments; Things Remain Uncertain In the Doomed Employment Market, How Far Will It Go?

Amazon has begun a second round of layoffs that are expected to affect nearly 9,000 employees across different departments, primarily affecting its human resources divisions and its cloud service operation. The layoffs have also been triggered as AWS, Amazon Web Services, the company’s most profitable division, experiences slowing sales growth.

The impacted AWS employees in the US, Canada, and Costa Rica were notified of the layoffs by CEO Adam Selipsky and Beth Galetti, Human Resources Head, in an email early Wednesday.

As per an internal memo, Selipsky is noted to have said, “It is a tough day across our organisation,’.

Amazon previously announced new rounds of layoffs that affected over 18,000 employees in November and January. These layoffs are part of Amazon’s plan to cut costs amid falling revenue, and CEO Andy Jassy announced 9,000 job cuts in March. On April 18th, Amazon lowered its workforce by letting go of several employees in its advertising unit to cut costs.

During the pandemic, Amazon, like other big tech companies such as Facebook and Google, increased hiring to meet the exponential demand from homebound Americans shopping online.

The AWS division also experienced a massive boost during the pandemic, benefiting Amazon and other cloud providers as companies, government agencies, and schools accelerated their transition to the cloud.

However, in recent months, both AWS and ads have experienced slowing growth due to companies reducing their spending in a challenging economic environment. As a result, the company decided to take drastic cost-cutting measures, including reducing its workforce. Some teams within AWS were included in the earlier round of layoffs.

“Given [our] rapid growth, as well as the overall business and macroeconomic climate, it is critical that we focus on identifying and putting our resources behind our top priorities-those things that matter most to customers and that will move the needle for our business,” Selipsky noted in the memo.

Job cuts outside North America would follow local processes, including consultations with employee groups where required by law. The first rounds of cuts mainly affected recruiting and HR teams, the retail group, and devices teams. On Wednesday, more cuts were made to the HR group, which has faced buyout offers and cuts since November.

Impact Of Global Firms Resorting To Layoffs
The latest round of layoffs by global firms has had a significant impact on the job market globally, with many individuals facing unemployment and increased competition for available positions.

According to a report by the International Labour Organization (ILO), the COVID-19 pandemic resulted in the loss of 255 million full-time jobs in 2020 alone, with 114 million of those losses occurring in Asia and the Pacific.

Post-pandemic, even as positivity surrounded the markets at the prospect of the economy opening up, the picture was far from what was anticipated.

Geopolitical uncertainty and rising interest rates spread a gloomy forecast giving way to recession concerns. The aftermath is for all to see, with layoffs announced through and through, not even sparing big global firms as they too have been contributing to this trend, with several companies announcing mass layoffs in recent months.

The Vicious Cycle: Economy Down And Drops Further
These job losses have had a ripple effect on the economy, leading to increased unemployment rates and reduced consumer spending. In the United States, for instance, the unemployment rate increased from 3.5% in February 2020 to 14.8% in April 2020 due to the pandemic and subsequent layoffs. While the unemployment rate has since improved, it is still higher than pre-pandemic levels.

Moreover, the competition for available jobs has become increasingly fierce, as laid-off workers are forced to seek new employment opportunities alongside recent graduates and other job seekers. This has resulted in reduced job security and lower wages, even as employers across the board have announced a hiring freeze.

What’s The Forecast?
Several industries have been particularly affected by the pandemic-induced economic downturn, including the hospitality, travel, and retail sectors.
For example, the airline industry alone has shed more than 400,000 jobs in the US and Europe, while the hospitality industry has lost more than 4.5 million jobs in the US alone.

Moreover, the latest round of layoffs has heightened recessionary concerns globally, with many experts warning that the job market may not recover for several years. In the US, for example, the Congressional Budget Office predicts that the unemployment rate will not return to pre-pandemic levels until 2024.

In addition to the direct impact on workers, the layoffs have also led to a decrease in consumer spending, which has had a ripple effect on the broader economy. For instance, the decline in tourism has had a significant impact on the economies of many countries that rely heavily on the industry.

In conclusion: The latest round of layoffs with global firms has had a profound effect on the job market globally, with many workers struggling to find new employment opportunities.
The recessionary concerns have further aggravated the situation, leaving many to wonder when and if the job market will recover fully.