As predicted in the last issue, Q2 ’08 registered a large number of layoffs (more than 75,236) in the U.S. than the previous quarter. The number of jobs cut increased to 275,292 in Q2 ’08 from 200,656 in Q1 ’08, according to Challenger, Christmas & Gray, a global outplacement consultancy firm. Since 1999, this is the fifth biggest loss with 585,188 jobs cut in Q4 ’01; 478,905 in Q1’02; 426,435 in Q4 ’02; and 315,415 in Q4 ’04.
While the jobs cut in June ’08 was 47 percent higher than the 55,726 job losses of June ’07, June ’08 downsizing (81,755 layoffs) itself was 21 percent higher than May ’08 (when jobs cut reached a 29-month high of 103,522).
Even though the sub-prime mortgage crisis bugged the real estate and financial sectors only in the second half of the last year, jobs cut remained moderate throughout the year averaging to 62,461 layoffs. However, the impact of this crisis is now becoming more visible due to the increasing number of jobs cut. As of now, companies have announced 475,948 jobs cut year to date.
“Many people were expecting a surge in job cuts beginning last August as the housing collapse and financial crisis began. However, while job cuts did surge in the financial sector, most other industries remained stable and, in many cases, were on the decline,” said John A. Challenger, CEO, Challenger, Gray & Christmas.
Further analysis suggests that the financial industry went under maximum downsizing. The industry registered 19,227 job losses followed by the government/non-profit sector (10,797), telecom (10,797), transportation (7,942), defense (7,043) and retail (4,973) to name a few. The automotive industry registered just 2,356 jobs cut, which stood at 30,011 in May’08.
Interestingly, outsourcing was one of the last five reasons behind 390 jobs cut in June ’08 — 39 percent down from May ’08 when 641 employees were laid off.
“The overall economy could continue to experience net losses for several months to come as large industries continue to shed workers amid rising costs and lower consumer spending. These losses probably will not match the number of jobs lost in the previous recession due to the fact that companies were more cautious when it came to hiring after the dot.com collapse. If this most recent period of job growth had matched the growth of the late 1990s, we would most definitely be seeing much heavier job-cutting now.”
- John A. Challenger, CEO, Challenger, Gray & Christmas
Mortagage / Sub-prime layoffs
Mergers & acquisitions
No clear reason
|Number of layoffs
Source: Challenger, Gray & Christmas