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Morning Memo

Newsletter: What's behind the global tech sector job cuts?

Political leaders here are attempting to sound reassuring amid global cuts.

This article is adapted from Morning Memo, The Journal’s daily business and economics newsletter. You can sign up for the newsletter in the box below.

AS THE TECH sector continues to lurch from one employment crisis to another, the Tánaiste is once again trying to sound reassuring. When it comes to online retail giant Amazon – that employs some 5,000 people in Ireland - no job losses are currently anticipated for its Dublin branch, Leo Varadkar insisted last night. That is despite reports of mass layoffs on the way for the business as a whole. 

The Fine Gael leader also revealed that he’s been in touch with Intel, and “while we’ve no absolute guarantees from Intel, we’re not expecting significant job losses from that company”. The computer chip giant is yet another technology multinational said to be planning global cutbacks with “headcount reductions” on the cards. 

This week, the Financial Times reported that Amazon is planning to chop about 10,000 jobs from its corporate workforce (it employs over 1.6 million people worldwide), and there have been similar reports in other broadsheet mainstays such as the New York Times. The FT spoke to a source who said the envisaged layoffs are part of an effort by the company to “cut loose loss-making or underperforming units of its business”.

In the light of some eye-watering operating losses, Amazon’s chief executive Andy Jassy has been carrying out a performance review of the business as a whole. This July, Amazon reported its second multi-billion dollar quarterly loss in a row, and the third-quarter results published in September showed continued decline.

Of course, the company still makes billions each year – but this year, Amazon has been on something of a downward trajectory. Earlier this month, Beth Galetti, Amazon’s head of HR, said a hiring “pause” would be put in place for at least the “next few months”. If the job cuts go ahead as reported, it would be the biggest cull of workers in the firm’s 28-year history.

In fact, it’s already begun. Some employees in Amazon’s devices unit – the section responsible for voice assistant product Alexa – have been given their marching orders in the past 48 hours. 

Amazon executive Dave Limp said in an ominous blog post: “We continue to face an unusual and uncertain macroeconomic environment. In light of this, we’ve been working over the last few months to further prioritise what matters most to our customers and the business.”

November is proving to be a bleak month for tech. It started on 4 November with Elon Musk slashing Twitter’s global workforce by 50%, and last week, Meta/Facebook boss Mark Zuckerberg said he’d have to “let more than 11,000 of our talented employees go”.

While the Facebook layoffs will affect up to 390 Dublin-based employees, Varadkar said yesterday that he hasn’t had “formal notification” from Twitter of Irish layoffs.

Also this month, Irish-based payments company Stripe announced 1,000 job losses, representing 14% of its global workforce. The Irish Times summed it all up last week as a “brutal autumn for tech”.

The overall picture seems to be that tech companies “overhired” in recent years on the strength of a boom in e-commerce that didn’t last, and are now being forced to scale back. As always, the wage bill is what companies hit first.

Varadkar previously insisted that one round of sackings after another should be seen as “downsizing” rather than “a major crisis in the tech sector”.

Yesterday, the Tánaiste said he has received redundancy notifications from tech companies Wayflyer and Intercom. Wayflyer plans to axe 70 jobs in Ireland, while Intercom expects to let almost 40 people go.

Varadkar said the Government will provide “any assistance we can” to those being made redundant. He insisted there are still a lot of job opportunities with Microsoft still hiring and Apple still expanding in Cork.

Meanwhile, Matt Shanahan TD told the Dáil yesterday that there are a “tsunami of difficulties facing small and medium-sized businesses in this country” and urged the Government to set up an “emergency task force” to look at the huge challenges facing SMEs.

“Otherwise, we will have a raft of business redundancies and unemployment in the new year,” the Waterford Independent representative warned Taoiseach Micheál Martin during Questions on Policy or Legislation.

The challenges facing SMEs “range from energy bills to delays in accessing energy grants and rebates, on top of rising rates, insurance problems and town planning issues, which are crippling many businesses coming up to Christmas,” Shanahan said. 

Endlessly rising inflation doesn’t help businesses either. Last week, it emerged that inflation of the price of goods and services in Ireland has shot back up to its highest level in almost 40 years. According to the latest figures from the Central Statistics Office (CSO), inflation currently stands at 9.2%.

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