Amazon, one of the world’s largest companies, has announced that it will axe 18,000 jobs to cut costs. The dramatic cut is part of its plans to become more efficient and cost effective while still delivering a wide range of services.
Most of the job cuts will be in Amazon’s retail operations, where it has grown its physical presence through bookstores, Whole Foods supermarkets and a renewed focus on brick-and-mortar locations. It currently employs about 798,000 people worldwide. In addition, the e-commerce giant said it will create 7,400 new roles during the same period mostly related to improved customer service and enterprise technology positions such as software engineers, data scientists and cloud architects.
Though the job cuts are significant for Amazon’s workforce worldwide it is hoped that the reallocation of resources towards tech-focused roles will help enhance Amazon’s product offerings in the face of intensifying global competition from rivals such as Apple and Microsoft.
Background
In April 2020, in an attempt to cut down costs and increase efficiency, Amazon announced that it would be cutting 18,000 jobs worldwide. Most of the job cuts were expected to affect employees who work in the company’s retail business – including at Whole Foods Market – and its corporate office.
The job cuts are the first major downsizing for Amazon since 2018, when it eliminated 2,000 corporate and technology jobs. The decision was part of a broader cost-cutting effort to curb spending as the company shifts away from traditional retail sales. This included closing several warehouses in France and Germany amid low demand due to the coronavirus pandemic.
The move was accompanied by regular salary increases for existing employees and also a new structure of bonuses for former workers who stayed with the company until the end of their contracts. However, despite these measures, thousands of retail workers have become displaced due to Amazon’s reorganisation efforts, which harmed those dependent on them for wages during this difficult period in global economic history.
Amazon to Axe 18,000 Jobs as it Cuts Costs
Recently Amazon announced that it will be cutting 18,000 jobs worldwide as part of its ongoing effort to reduce costs. This news has caused a lot of concern among workers, as it may have a significant negative impact on them, their families, and the local economies in which they are employed.
In this article, we will take a closer look at the potential impacts of these job cuts:
Impact on Employees
Regardless of the cause, the loss of jobs can be devastating for employees who may suddenly find themselves without employment. Especially in difficult economic times such as these, job losses have far-reaching consequences for the individuals, their families and society as a whole.
Employees laid off may suffer a financial blow and likely experience economic insecurity. This could mean they cannot find similar employment opportunities or keep up with bills and expenses. Studies have shown that the most vulnerable workers – those without personal resources or an accredited college degree – are most impacted by job cuts due to wage stagnation and decreases in job creation. The effects on their communities can eventually lead to poverty.
Layoffs may also lead to stress, which has both physical and emotional impacts including:
- depression;
- trouble sleeping;
- lower self-esteem;
- anxiousness;
- feelings of guilt or helplessness;
- aggressive behaviour;
- decreased productivity;
- emotional numbness;
- substance abuse and
- physical health issues such as headaches and stomach problems.
Affected individuals need to obtain help if needed during this difficult transition period. Furthermore, the American Psychological Association (APA) provides psychological resources tailored towards those affected by reduction can be found here.
Impact on Amazon’s Business
Amazon’s announcement to lay off 18,000 employees has caused questions about the current trends in the job market for tech companies worldwide. The layoffs signal that Amazon is responding to changing market conditions by cutting back its workforce and related costs.
The decisions to reduce staff by 18,000 and thus introducing a significant cost-cutting measure, was an essential step on Amazon’s profit-seeking journey. Despite being one of the largest global tech-giants, Amazon made a pragmatic decision to reduce its labour force instead of running losses while aiming at higher profits.
However, there are contradictory opinions on this aspect of employment trends about changes faced by Amazon’s business interests. Unsurprisingly, many stakeholders consider it an infringement on employment policies at large given the realignment in global job opportunities that can result from these trends.
Furthermore, several potential benefits for shareholders, including increases in returns, have also generated debate about whether such cost-cutting measures will be consistent over time. This has raised multiple questions regarding how far companies like Amazon should go when considering labour forces reductions as part of their cost reduction strategies:
- Will cost cutting measures be consistent over time?
- What are the implications for global job opportunities?
- What are the potential benefits for shareholders?
Reasons for Job Cuts
Amazon’s recent plans to axe 18,000 jobs has raised many questions. Amazon decided to cut costs, and their workforce will bear the brunt in the process.
This article will examine why Amazon decided to reduce its workforce so drastically. We will examine the job cuts’ impact on the company and its employees.
Cost-cutting Measures
One of the reasons Amazon is cutting 18,000 jobs is because of cost-cutting measures. In addition, the restructuring that Amazon recently undertook has triggered a significant reduction in its global workforce.
The cutbacks are taking place as the world’s largest online retailer strives to lower its costs in the face of declining sales growth and competition from other ecommerce companies and brick-and-mortar stores.
Reduced spending across several departments within Amazon including retail, cloud computing and logistics were reportedly part two key initiatives that triggered this cost-cutting exercise. In addition, cuts in operations costs and increased productivity was another measure which has enabled Amazon to make these painful decisions.
Amazon also reportedly focused on streamlining and automating customer service processes to decrease customer service staffing costs, leading to further job cuts.
Despite these severe cost-cutting measures, it is expected that Amazon will still be able to meet its long-term financial goals as it continues to dominate online retail markets across the globe with a projected $119 billion in sales for 2018 and aggressive expansion plans for 2019 and beyond.
Shift to Automation
Amazon announced that it plans to cut 18,000 jobs this year as part of a shift to automation in its fulfilment centres. Automation is likely to be used in the sorting and shipping processes, cutting thousands of mundane, repetitive tasks traditionally done by humans.
The cutting of these 18,000 positions follows last year’s move by Amazon to automate the check-in process at its more than 80 Amazon Go Grocery stores. The check-in process was previously handled entirely by human employees, but now has been replaced by the Just Walk Out technology, allowing customers to enter through automated turnstiles and find their items faster than before. This new technology resulted in fewer cashiers and customer service representatives needed at these stores.
In addition to automation at grocery stores and warehouse operations, Amazon has started putting robots in its warehouses for faster order picking. By replacing human labour with these robots, Amazon can increase its efficiency while cutting costs.
Overall, Amazon’s shift towards automation and cutting 18,000 jobs demonstrates the company’s commitment towards efficiency gains through new technologies.
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