US job openings increased 22% in October
The UK fears the longest recession for 100 years
As interest rates continue to climb and the possibility of an economic downturn looms large, major US companies are tightening their belts by announcing large-scale layoffs. When the United States Federal Reserve (Fed) announced that the interest rate would reach the 5% range next year by taking a huge step (increasing the base rate by 0.75 percentage points) four times in a row, restructuring focusing on big technology (major technology companies) ‘ A strong wind began to blow. The Bank of England (BOE), which achieved the first major step in 33 years on the 3rd, was also concerned that it could fall into the longest recession in 100 years.
○ Following Big Tech, Wall Street and new businesses also ‘postponing employment – redundancies’
According to the Wall Street Journal (WSJ) and Business Insider, the world’s largest e-commerce company, Amazon, informed its employees on the 2nd that it was “suspending new hires”. It is known that Apple, the world’s No. 1 company by market capitalization, has decided to stop hiring all departments except Research and Development and hold it until September next year. US ride-hailing company Lyft also announced layoffs of 13% of its 5,000 employees.
Wall Street financial firms and startups have also begun restructuring. Morgan Stanley, one of the world’s three largest investment banks, is expected to begin layoffs in the coming weeks, according to Reuters. Stripe, an American online payment service provider, also informed its employees on the 3rd that it would lay off around 1,000 people, or 14% of its total workforce.
Analysts say companies are preparing for a long-term war by reducing employment after the Fed signaled it has no choice but to keep raising interest rates despite fears of a recession in order to contain inflation. Consumers are reducing their spending due to the burden of loan debt, the export outlook is bleak due to the strong dollar, and the increase in financing costs due to high interest rates overlaps with the long-term prosperity of US corporations. Amazon CEO Andy Jacy said on the same day that it was “quickly closing some businesses and preparing for a downturn.” Stripe CEO Patrick Collison said: “Management made the mistake of misjudging the situation this year and next year. Discounts are inevitable,” he said. Immediately after the new coronavirus infection (COVID-19), office workers voluntarily resigned in all countries.
According to the US Department of Labor on the 4th, the number of new jobs in the US in October was 205,000, down 22% from September (263,000), but higher than the market estimate. Analysts say jobs in the service sector are still overheated, unlike big companies which are cutting jobs. As a result, it is expected that the Fed will continue to tighten its austerity measures, which will increase the burden on businesses.
○ UK Central Bank: “Longest recession in 100 years possible”
The BOE also raised its key interest rate from 2.25% to 3.0% on the 3rd in line with the Fed’s rate hike. This is the first major step since 1989. The BOE expects the unemployment rate to rise from 3.5% to 6.5% by mid-2024. The British public BBC reported, “The BOE has presented policy rate guidelines, which is usually doing, in its minutes, suggesting that the rate will rise to 4.5% by the fall of next year.”
“The worst crisis since World War II could be coming,” US hedge fund Elliott Management wrote in a letter to investors on the 3rd. The world is heading for ‘hyperinflation’, which may lead to social collapse, civil war, and international conflict.”
In Korea, it is predicted that the increase in the number of employed people next year will fall to one-tenth this year. According to a report recently released by the Korea Development Institute (KDI), it is analyzed that the number of employed people in Korea next year will increase by only 84,000, which is 10.6% from this year (791,000).
Reporter Lee Eun-taek nabi@donga.com
Paris = Correspondent Jo Eun-ah achim@donga.com
Sejong = Correspondent Choi Hye-ryeong herstory@donga.com
