Perhaps biggest question in the minds of people under home quarantine and following government instructions is - Are Their Jobs Secure? When the entire world is battling the novel coronavirus creating havoc in people's lives, social distancing and lockdown measures are posing one of the biggest challenges of our times with extensive layoffs.
The virus came as a curse for the worldwide economy with majority of sectors facing its wrath. Several businesses have either closed or reduced their operations while several others are at the risk of closing around the world. In such uncertain times, companies on a global level are downsizing to manage expenses.
Along with the most expected sectors to lay off like hospitality, aviation and oil, reports of layoffs in government sectors are also doing the rounds.
Airbnb Cuts Nearly 25 Per Cent of Workforce
Airbnb Co-Founder and CEO Brian Chesky recently released a statement regarding the company’s plan to reduce workforce size, citing that the harrowing crisis has brought the global travel industry to a standstill. The company is laying off around 25 per cent of employees to reduce cost, targeted towards created a more focused business strategy to capitalise on the future travel market.
Mr Chesky highlighted that the decision was made owing to several factors including huge impact on the business. The company’s revenue this year is projected to be less than 50% of what Airbnb registered in 2019. As a response, the company raised capital worth USD 2 billion and dramatically reduced expenses.
He mentioned about the uncertain times with no clarity on when will the travel business return, highlighting that when it would return, it will not be the same.
Uber to Lay Off 3,700 Employees
Uber Technologies, Inc. (NASDAQ: UBER) is set to lay off around 3,700 employees, according to an SEC filing. The company is reducing workforce from customer support and recruiting teams in the wake of uncertainty and economic challenges due to the COVID 19 pandemic.
The company has estimated to incur about USD 20 million concerning severance and other termination benefits with CEO Dara Khosrowshahi agreeing for a salary cut till the last month of the year 2020.
Accommodation and food services among worst hit due to COVID 19
As per a new report by the Australian Bureau of Statistics, around one in three accommodation and food services paid jobs was slashed between mid-March and mid-April. If we talk about Australian weekly jobs and wages during the same period, total jobs were cut by 7.5 per cent, and employers paying wages also fell by 8.2 per cent.
Head of Labour Statistics, ABS, Bjorn Jarvis, stated that the two industries were among the worst affected sectors with a job reduction of 33.4 per cent, while jobs in arts and recreation services went down by 27 per cent. Maximum job cuts were in Victoria (around 35.6 per cent) and South Australia (39.7 per cent).
The new report also highlighted more job cuts among a specific age group. Mostly these people are youngest employees between 20 and 29 years and veteran ones aged more than 70 years. Jobs decreased for the younger lot by around 40.8 per cent and 43.7 per cent for the aged ones.
Worley Cuts 3,000 Jobs During COVID-19 Crisis
Engineering services provider, Worley Limited (ASX: WOR) is taking all the measures to adapt as per the changing business environment. The company has strengthened its liquidity position by adding new debt facilities of AUD 465 million.
Due to the market uncertainty, WOR observed a reduction of headcount by 5 per cent, equivalent to around 3,000 jobs, primarily in the fieldwork area.
As the utilisation of staff remains main focus of the management, it is taking steps to maintain utilisation above target, with chargeable hours of employees reduced by 2 per cent.
In this unpredictable market situation, Worley is preparing itself for a range of future scenarios. Realising that it is not too late, the company intends to continue the following measures:
- Adjusting to support and operational cost structures.
- All non-essential capital expenditure postponed.
- Focus is to protect cash, minimise discretionary spend, and manage receivables.
- Non-billable recruitment and salary freezing to continue.
Three Waves of Layoff During the Crisis
- One – Companies are implementing salary cuts with top management and CEOs agreeing to a salary cut in several cases during this challenging phase.
- Two – There are several companies that are forgoing salaries of their employees to keep them on board.
- Three - When employees are being terminated from their post as is the case with all above-mentioned companies.
Interestingly, another trend is where companies are hiring due to increased demand during the pandemic phase, for instance Woolworths Group.
Woolworths Group Hiring amid COVID-19
Woolworths Group (ASX:WOW) is hiring during the crisis, along with going into partnership with companies like Uber and PFD. WOW has doubled its online capacity to meet the increasing demands.
Woolworths Group CEO, Brad Banducci stated that the company worked hard since the onset of pandemic to give employment across its various channels like supply chain, e-commerce, supermarkets and Endeavour Drinks. WOW redeployed over 3,600 hotel team members, and team members from Qantas filled several jobs.
Federal Government Support
Federal government in Australia has rolled out the Jobkeeper payment program to protect the jobs of employees during the COVID-19 crisis. Jobkeeper payment can be claimed by employers to cover employees' wages. Employees will be informed in case their employers will request the payment of AUD 1,500 per fortnight on the employees' behalf.
Eligible individuals can apply online through myGov to get up to AUD 10,000 of their superannuation before 1 July 2020 and an additional AUD 10,000 from 1 July 2020 until 24 September 2020. Tax is not required to pay for the released amount.
Businesses are trying hard to capitalise on the changing trends, but the situation worldwide puts a grim and horrifying picture in terms of economy, business and corona related health concerns. With the fear of coronavirus still there, businesses are cutting jobs and freezing salaries. Let us wait and watch to see what unfolds next.