50% of companies worldwide planning job cuts amid economic downturn: Report
At least half of the companies worldwide are planning to lay off people, most are reducing bonuses and rescinding job offers amid the economic downturn, a new report has warned.
According to the latest PwC ‘Pulse: Managing business risks in 2022’ survey in the US, 50 per cent of respondents are reducing their overall headcount, even as business leaders remain concerned about hiring and retaining talent.
“At the same time, respondents are also taking proactive steps to streamline the workforce and establish the appropriate mix of worker skills for the future,” said the report that came out on Thursday.
This comes as no surprise, after a frenzy of hiring and a tight labour market over the past few years, as “executives see the distinction between having people and having people with the right skills”.
“For example, 50 per cent of all respondents are reducing their overall headcount, 46 per cent are dropping or reducing signing bonuses and 44 per cent are rescinding offers,” the report revealed.
More than 32,000 tech workers have been laid off in the US till July, including at Big Tech companies like Microsoft and Meta (formerly Facebook), and the worst has not been over yet for the tech sector that has seen massive stock sell-off.
In India, more than 25,000 startup workers have lost jobs since the pandemic began — and more than 12,000 have been fired this year.
The PwC report mentioned that these precautionary actions are more in certain industries.
“Consumer markets and technology, media and telecommunications companies, for example, are more likely to invest in automation to address labour shortages,” the PwC report mentioned.
At the same time, healthcare is seeing bigger talent challenges than other industries and is more focused on rehiring employees who have recently left.
The global consulting firm last month polled more than 700 US executives and board members across industries.
With increasing economic uncertainty, 83 per cent of executives are focusing their business strategy on growth.
That uncertainty has become the standard with business leaders feeling cautiously optimistic about their ability to navigate future economic, social and geopolitical uncertainty.
“On the whole, this generation of corporate leaders have minimal experience navigating a recession, yet with the possibility of one looming amid increasing geopolitical divides and skyrocketing inflation, they are bullish on their ability to handle what could be ahead,” said Kathryn Kaminsky, vice chair, trust solutions co-leader, PwC US.
“Looking forward, executives will need to continue adjusting their business strategy and investments to mitigate risks and capitalise on growth opportunities,” Kaminsky added.
Nearly two-thirds of businesses (63 percent) have changed or are planning to change processes to address labour shortages, up from 56 per cent in January 2022.
“Ironically, as businesses pivot even more towards automation, it’s critical to find employees with the right combination of deep functional knowledge and technology know-how. Without the right talent, automations can fail to deliver on promised efficiencies and increase operational risk,” the report noted.