Challenger, Gray & Christmas, a global outplacement and career transitioning firm headquartered in Chicago, has brought attention to a worrisome trend in the job market of the United States. In 2023, job cuts by US employers spiked by 98% compared to the previous year, raising alarms about the health of the labour market.
Also Read: 22% Indian Firms Cut Jobs In 2023 As Against Global Average Of 32%: Report
According to the report, a significant 721,677 job cuts were planned by companies in 2023, a substantial increase from the 363,832 layoffs reported in 2022. This surge is attributed to various factors, and experts predict that the situation may worsen in 2024 as the labour market faces challenges such as high interest rates and persistent inflation.
Andy Challenger, Senior Vice President of Challenger, Gray & Christmas, highlighted that “labour costs are high,” prompting employers to remain cautious and focused on cost-cutting measures. He added that this caution is expected to slow down the hiring process for many job-seekers, with the possibility of continued job cuts in the first quarter of 2024, as per Fox News.
One sector that bore the brunt of these job losses in 2023 was the technology industry, which witnessed a 73% increase in layoffs compared to the previous year.
A total of 168,032 employees were affected, a number just shy of the sector’s annual record set in 2001. The impact on the tech sector is attributed to factors like the rise of artificial intelligence, mergers and acquisitions and the realignment of resources and talent.
Retail companies also faced a substantial number of job cuts, with 78,840 positions eliminated in 2023, marking a remarkable 274% increase from the previous year. Despite cautious hiring practices, the retail sector is urged to remain vigilant in the face of ongoing challenges.
Healthcare and product manufacturing, including hospitals, also experienced significant job cuts, with 58,560 positions eliminated in 2023, reflecting a 91% increase from the previous year. The reasons cited for these job cuts include deteriorating market and economic conditions, high inflation, a sharp rise in interest rates, store closures, bankruptcy, and the impact of artificial intelligence on certain industries.
Economists expected a slowdown in the labour market, but the tight labour market persisted throughout the past year, defying predictions. While there are signs of a gradual normalization, the situation is far from breaking. The recent Labor Department report, indicating the addition of 216,000 jobs in December, suggests a labour market that is gradually slowing down.
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