Morgan Stanley critics say that tech layoffs are not a leader for broader cuts in different industries
November 22, 2022: -The ranks of tech employees at firms from Asana to Amazon and Meta are being winnowed by massive cuts not seen since the days of the Covid-19 pandemic. Still, on Thursday, Morgan Stanley analysts stated that they don’t view these that lay off as a “harbinger of changes” for the broader labour pool.
The analysts stated that the significant market cap of tech firms and “idiosyncratic” hires in tech relative to the rest of the labour market have resulted in tech layoffs that have an outsized impact on perceptions.
But as the analysts added, tech layoffs from December 2021 “only sum 187,000, a sizeable number for the sector barely over 0.1% of total U.S. payrolls.” Bold tech firms’ hiring resulted in payrolls at tech and tech-adjacent firms rising “sharply above pre-pandemic,” leading the broader market, which recently lagged 2019 peak employment.
Morgan Stanley is expecting a “sharp” drop-off in employment growth, which cited the slower customer demand precipitated by increased Federal Reserve rates as a trigger for rising cutbacks “across most sectors of the economy.”
But the analysts said significant job scrapes in non-tech industries are unlikely, as “the economy at biggest remains short-staffed.”
Even if leaders may want to trim labour costs, “there show to be little fat to cut,” they added.
But the views of cost efficiency and ethical hiring practices may be what the need is hearing, the analysts wrote. For senior executives at internet companies and in the broader markets, “it is important for the firms to evaluate how to manage cash discharge better” as they adjust to a “slower ’23 world,” the analysts added.
Recently, though, tech layoffs are not “the canary in the coal mine,” they added.
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