This comes after an initial wave of layoffs in 2022, which began with fintech companies laying off employees due to falling valuations. However, the 2023 layoffs have extended to Big Tech and established fintech firms.
Company executives’ hypocrisy
The hypocrisy of some company leaders is one notable difference between the current layoffs and those in previous economic downturns. In the past, management openly cut staffing levels in order to maintain profitability. However, many of these same companies now promote stakeholder capitalism and a commitment to purpose and profit. This calls into question the validity of stakeholderism, with layoffs exposing management’s incompetence and calling into question their commitment to their employees.
Workers with knowledge are expendable.
Another striking feature of the current round of layoffs is the expendability of knowledge workers. Unlike in the past, where automation primarily impacted lower-skilled and less-educated workers, the current digitization of many industries is eliminating roles that require knowledge workers. This is due to the development of economies of scale, which necessitate the use of far fewer people to fulfill the roles’ requirements. Furthermore, the ability to “plug and play” human resources means that Big Tech and fintech firms can let people go without having to invest time and money in training new employees when the next up-cycle occurs.
The power dynamic between employees and employers
The layoffs also highlight a shift in the power dynamic between employees and employers. Employees had more bargaining power before the pandemic, but that power has now shifted back to employers. While technology firms are emboldened to let people go when it is convenient for them, this creates a precarious situation for employees, particularly younger ones who have never experienced a wave of layoffs.
Recent layoffs in the technology industry are a departure from previous ones. Companies used to be unapologetic about reducing their staffing levels, but the situation has changed. The hypocrisy of some company leaders in light of previous statements about stakeholder capitalism and the expendability of knowledge workers raises concerns about management competency. Furthermore, the shift in the employee-employer power dynamic puts employees in jeopardy.
Featured image: InvadingInvader, CC0, via Wikimedia Commons
