The job loss announcements in the tech sector before Christmas have been followed by more similar news in recent days, with big players including Microsoft and Alphabet – Google’s parent – announcing plans to reduce their workforce. There is no clarity yet on the exact implications of these announcements for Ireland, though the scale of employment in these firms here means some job reductions are inevitable. Spotify, which has a smaller number of employees here, is also cutting its global workforce.
The script from the big companies remains the same – they over-expanded during the pandemic, based on soaring demand, and now need to adjust. Slower global growth and the impact of the cost-of-living crisis on consumer demand are important factors. So the big players are restructuring, driven in part by pressure from investors to reduce costs, particularly in parts of their business not directly profitable, including what might be termed vanity projects.
If this is indeed a mid-flight adjustment, then the sector may return to growth before too long. Likely losses will be a good deal less than the 21,000 gains in the ICT sector since before the pandemic. While traumatic for those affected, many firms continue to hire so there should be employment opportunities elsewhere.
That said, the turn in the tech sector is a story which is still playing out. As well as the layoffs, the hiring freezes in place now in many companies will have an impact, reducing opportunities for new graduates and those seeking to move jobs.
A helping hand with the cost of caring: what supports are available?
Matt Williams: Take a deep breath and see how Sam Prendergast copes with big Fiji test
New Irish citizens: ‘I hear the racist and xenophobic slurs on the streets. Everything is blamed on immigrants’
Crucial weekend in election campaign as bland as an Uncle Colm monologue on Derry Girls
The increase in well-paid jobs in the ICT sector has been a significant plus for the economy in recent years; the question now is whether we are looking at a temporary reversal which will take some heat out of what has been a very tight jobs market, or something with longer-term implications. The ongoing strength of other multinational sectors - particularly pharmaceuticals and medical technology– remains encouraging. And fears of a deep international recessions have eased somewhat. But there is no doubt that we are now looking at a more mixed period of gains and losses for multinational jobs, after a few very strong years. Meanwhile, job losses in Argos and in some areas of the hospitality sector show that other sectors, too, have their own difficulties.
This all points to slower real growth in the Irish economy this year. The economy bounced back from the Covid-19 lockdowns, but the cost-of-living crisis will have a longer-term impact. An Irish recession looks unlikely and we can hope that the resilience the economy has shown in recent years will continue. But with a heavy reliance for tax revenues on the multinational sector, some caution is now called for along with a renewed focus on what needs to be done to underpin longer-term growth prospects.