The Era of Layoffs... A Cruel Spring Amid the Wave of Restructuring

UBS Layoffs with CS Integration "Largest Among Single Companies"

The wave of layoffs that began in Silicon Valley on the U.S. West Coast is spreading to Wall Street on the East Coast and even to Europe. Credit Suisse (CS), which was on the brink of bankruptcy before being acquired by a competitor and revived, is now facing the largest wave of layoffs in its history.

According to Bloomberg News on the 4th (local time), citing Swiss local media, UBS, Switzerland's largest bank, which recently acquired CS, will lay off up to 30% of CS employees. It is expected that up to 36,000 employees worldwide, including 11,000 in Switzerland, will be laid off. Bloomberg reported that this is the largest single-company workforce reduction among global companies that have cut staff in the past six months.

UBS, which acquired CS, is expected to undertake a high-intensity restructuring tantamount to corporate dismantling. At the time of the acquisition announcement, UBS stated plans to downsize CS's IB division and said it was premature to discuss layoffs. However, later, UBS CEO Ralph Hamers revealed that of the $8 billion (about 10.5 trillion KRW) in cost savings from the merger, $6 billion (about 7.9 trillion KRW) would come from workforce reductions.

The Epicenter of the Layoff Storm is Big Tech

According to Bloomberg News' tally, approximately 538,000 employees worldwide were laid off over six months from last October to the end of last month. Following UBS, the companies with the largest layoffs were concentrated among big tech firms: Amazon (30,000), the largest U.S. e-commerce company; Meta (21,000), a U.S. social media company; Accenture (19,000), a global management consulting firm headquartered in Ireland; Alphabet, Google's parent company (12,240); FedEx (12,000); and Microsoft (11,120).

Big tech companies, which rapidly expanded during the COVID-19 pandemic, have been conducting high-intensity workforce restructuring since last year. Amid uncertain economic forecasts, they have been cutting hundreds of thousands of jobs to reduce costs and protect profits.

[Image source=AFP Yonhap News]

Apple, the world's largest company by market capitalization and the only U.S. big tech firm previously spared from the layoff storm, has recently reportedly laid off some teams. Bloomberg, citing internal sources, reported that Apple is eliminating some positions within its corporate retail team.

Sources explained that Apple is reducing positions within the so-called "Development Preservation Team," responsible for construction and maintenance of retail stores and facilities worldwide, but the exact number of jobs lost in this layoff is unknown. Apple reportedly described this move as an efficiency improvement rather than layoffs. The last time Apple laid off employees was before the COVID-19 pandemic, when it cut hundreds of employees in its autonomous vehicle division.

Recession Hits Retail and Manufacturing

The wave of layoffs that began in some tech companies, including big tech, is spreading across retail and manufacturing sectors. McDonald's, a symbol of U.S. retail, recently joined the ranks of companies conducting layoffs. It is not known how many employees McDonald's has laid off in this round. McDonald's has offset inflation-driven raw material cost increases through consumer price hikes and showed growth in both sales and profits last quarter, but it has emphasized the need to respond to macroeconomic deterioration such as interest rate hikes and pressure on profit margins.

In January, McDonald's officially announced its layoff policy, warning of potential sales declines as U.S. consumers reduce store visits and some locations experience lower average spending per customer. Meanwhile, energy companies, which recorded record profits last year due to soaring energy prices caused by the Russia-Ukraine war, have been spared from the layoff whirlwind.

[Image source=Reuters Yonhap News]

The U.S. manufacturing Purchasing Managers' Index (PMI) for March was 46.3, the worst level in three years since May 2020, indicating an accelerating contraction in U.S. manufacturing. Foreign media pointed out that new orders sharply declined, causing U.S. manufacturing activity in March to fall to its lowest level in three years. High interest rates have increased financing costs, further dampening corporate activity.

The possibility of a sharp rise in oil prices is also pushing inflation higher and negatively impacting the manufacturing sector. The Organization of the Petroleum Exporting Countries (OPEC) Plus, a coalition of OPEC and major non-OPEC oil-producing countries including Russia, will begin large-scale production cuts next month. This production cut, led by Saudi Arabia, is separate from the previously announced 2 million barrel cut in October last year, bringing the total cut to 1.66 million barrels per day (bpd). The surge in oil prices could reignite inflation, which had recently shown signs of slowing, raising concerns that central banks worldwide, including the U.S. Federal Reserve (Fed), may strengthen their interest rate hike paths.

This content was produced with the assistance of AI translation services.