WHAT RISKS WILL THE HUMAN RESOURCE MARKET EXPERIENCE PRIOR TO THE GLOBAL ECONOMIC RECESSION?
In the third quarter of 2022, many economic fluctuations occurred and greatly affected thousands of businesses around the world. According to the World Monetary Fund, pressure from the food and energy crisis due to war and the increase in inflation is pushing the world economy to the brink of recession.
Facing the brink of recession, the HR market has faced a lot of risks when the BigTechs have implemented staff reduction to minimize financial risks. Specifically, last weekend, Twitter also caused bewilderment when it announced the layoff of half of its employees. Meta - the holding company of Facebook also laid off 11,000 employees. Or Lyft, a rideshare app, also laid off 13% of its workforce. In early November, three sources revealed to Business Insider that many departments at Apple and Amazon also announced that they would not hire new employees in the near future.
The key problem for the staffing crisis is the increase in traffic and revenue during the pandemic when consumers stay at home with high demand for entertainment. The unusually high demand has encouraged the industry to hire and expand more than usual. But when people's life stabilizes again, the HR market has not adjusted leading to an increase in inflation.
In an effort to cool down the HR market, the Fed raised interest rates by 0.75% in October, and Americans are cutting back on non-essential goods and services. Many technology corporations provide this type of service and are strongly affected. In October, Google reported a drop in profits, while ad revenue for social media companies like Meta also fell, The New York Times reported. Amazon's value falls below $1 trillion for the first time since 2020.
“Overall this means that while it is important to follow some of the high profile tech layoffs, they are not indicative of the overall trends in the labor market, or even in the tech sector”, Bledi Taska, Chief Economist at Lightcast commented.??
In addition, it's self-inflicted damage by tech companies in their reckless pursuit of extraordinary consumer growth. But this event will help technology corporations stabilize their workforce and learn from the incident.
As for the employees who were fired, Vex has commented: "Other organizations will soon offer them when having experience working at big corporations." Kathy Zhu, a co-founder of start-up Streamline AI, said: "Right now, the HR market is full of talented people looking for work because of the layoffs. A few years ago, it was impossible to attract these people like that." In fact, this reduction in personnel indirectly "shares the talent pool" of big corporations with smaller companies and helps them have more opportunities to develop".
The effects of economic fluctuations on the HR market are negligible. In addition, it also gives the HR market and the technology industry a space to move out of the old things and find the right direction for future development.
In your opinion, which impact of this global layoff have on the HR market? Comment down below to let us know!
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