Amazon to Fire 18,000 Staff to Cut Costs

Amazon are planning to cut 18,000 jobs

Amazon is planning to lay off more than 18,000 staff to cut back on costs. It will be the largest dismissal of workers in the firm’s 28-year history.

It has not yet been announced where the job losses will occur but some will be in Europe. Most of the layoffs will reportedly occur within Amazon’s physical store locations, including Amazon Go and Amazon Fresh, as well as its human resources department.

The role eliminations were made publicly known on January 5, 2023, in a memo by Amazon CEO Andy Jassy. The memo was issued following a leak by one of Amazon’s employees.

Amazon to cut staff

In the memo, Jassy announced “the difficult decision to eliminate additional roles.” According to the Amazon CEO, the company has outlined a “plan to eliminate just over 18,000 roles.”

Presently, Amazon employs about 1.5 million people, as of the third fiscal quarter of 2022 (2022 Q3). However, in 2021 Q4 and 2022 Q1, the firm had just over 1.6 million staff members.

“This year’s review has been more difficult given the uncertain economy and that we’ve hired rapidly over the last several years,” Jassy commented in the memo.

He added that Amazon is “deeply aware that these role eliminations are difficult for people, and we don’t take these decisions lightly or underestimate how much they might affect the lives of those who are impacted.”

“We are working to support those who are affected and are providing packages that include a separation payment, transitional health insurance benefits, and external job placement support,” Jassy tried to reassure employees who may be facing job losses in the imminent future.

Causes

Beyond pointing to “uncertain and difficult economies” and enunciating the need for a “stronger cost structure”, Jassy did not give an explicit reason for the layoffs.

However, the multinational firm had already announced job cuts as recently as November last year. Most of the layoffs were targeted at the company’s devices group and those working on Echo smart speakers and the Alexa digital assistant.

The most likely cause for the layoffs is that Amazon has been experiencing a regression in sales since the end of the pandemic. During the peak of the pandemic, many consumers were bored at home during lockdowns and were spending online out of boredom.

Revenues have also been dented by a downturn in advertising. Firms are spending less on commercials to save money. At the same time, consumers are less keen to part with their cash, as energy prices rise and the cost of living crisis continues to worsen.

Economic woes?

Other big tech firms are announcing job cuts with an anxious eye on the economy. Meta, the parent company of Facebook, Instagram, and Whatsapp laid off 11,000 workers in November last year.

At Google, which has been streamlining to cut costs, anxieties amongst employees are also mounting that a big layoff is impending. Google is however also continuing to make significant investments in digital infrastructure across the world.

Due to the size of firms like Amazon, Meta, and Google, their financial performance can have broad consequences for regional and global economies. For now, it remains to be seen whether job cuts at Amazon are an isolated issue, or whether they are indicative of broader problems facing the tech industry or the global economy as a whole.