Amazon, the world’s second-largest private employer behind Walmart Inc., is set to lay off more than 18,000 employees. Its CEO, Andy Jassy, made this workforce reduction announcement on Wednesday, January 5, 2023. Most of those cuts will come from the company’s e-commerce and human resources divisions in the US, Europe, and India.
The move marks a dramatic shift for Amazon, which just months ago raised its minimum wage floor to compete with other retailers for talent. It also highlights the impact of layoffs on the technology sector, as Amazon now surpasses Facebook parent META Platforms in job cut announcements for 2021.
In his public staff note, Jassy indicated that the layoffs were due to an uncertain economy and rapid hiring since last year. The cuts represent 6% of Amazon’s corporate workforce, bringing it closer to the September 2021 figure of around 275,000 positions globally.
The retail giant’s stock fell 1% on Thursday and is half its price a year ago. This follows other reports of a slower rise in online sales over the holiday season, with consumer prices up about 7%.
Amazon began trimming its workforce back in November from its devices division with an estimated 10,000 cuts. Layoffs.fyi estimated that 2020 saw more than 150,000 tech industry layoffs this year alone.
Salesforce Inc also announced plans for a 10% staff reduction on Wednesday, which could leave thousands jobless given the company’s headcount of nearly 8,000 as of October 31.
Jassy’s note followed a report in the Wall Street Journal that the reduction would be more than 17,000 jobs. He was explicit about his plan to disclose the news public before informing those affected by it, citing an earlier leak. The Amazon CEO also confirmed their intention to provide severance pay and honored legal requirements for mass layoff notifications.
GMB, London’s largest trade union, is already aware of the job cuts but said its members would not be affected. By contrast, Spain’s CCOO expressed concern over the need for more information from Amazon regarding how these changes might affect their workforce based in Spain – most of whom do not have union representation.
Amazon workers at its Coventry warehouse plan a walkout on January 25 in a dispute over pay, demonstrating that other labor disputes at the retail giant may follow Amazon’s move to reduce its workforce.
The layoffs are concerning not only because of their size and scale but also as more companies worldwide turn to automation and artificial intelligence to cut costs. This is particularly true for large-scale retailers like Amazon as consumer habits continue to shift online and away from brick-and-mortar stores.
Jassy declared, “Amazon has weathered through complex and unpredictable economics before, so it will continue to do the same this time.” Yet there is still a query if Amazon can survive these newly announced layoffs without any permanent damage or harm to its standing.
For those involved in the job cuts, their future is yet unknown. It’s an alarm that even excessive companies like Amazon have no choice but to make hard decisions when confronted with uncertain economic times.
