July 12, 2011
In case there hasn’t been enough bad news about the job market lately, it now looks as if Cisco Systems Inc., the big networking-equipment company, may cut as many as 10,000 jobs, according to Bloomberg. The cuts reportedly include eliminating 7,000 jobs by August and offering early-retirement packages to 3,000 additional employees.
The news sent shivers through Silicon Valley, which had been expecting layoffs of around 5,000. The move is part of an effort by Cisco CEO John Chambers to slash $1 billion in operating expenses. In May, the company reported an 18 percent drop in fiscal third-quarter profits on sales that edged up slightly. Cisco has been losing share in the global market for routers and, in a strategic reversal, has announced plans to shed several consumer businesses. The company shuttered its Flip video-camera unit in May.
"We have acknowledged our challenges,” said Chambers at the time. “We know what we have to do. We have a clear game plan, and we are a company with a track record of market-shaping innovation. We thank our shareholders, employees, customers, and partners as we transition to the next phase of Cisco."
News of Cisco’s layoffs follows terrible jobs numbers for the overall economy. In June, the economy added only 18,000 jobs, far below what economists had expected. The weak numbers stoked fears of a double-dip recession and further roiled the already jittery stock market. Currently, 14.1 million Americans are unemployed.
In addition to weak job creation, Cisco and other companies are continuing to downsize their workforce. Cell-phone giant Nokia recently began laying off 275 at its U.S. headquarters in Harrison, New York, part of a job slashing totaling 7,000 positions worldwide. Goldman Sachs began a round of layoffs last week and is expected to cut up to 230 jobs in New York. Lockheed Martin recently announced job cuts totaling 1,500 positions, while Gannett laid off 700 people in recent weeks.
More than two years into the recovery, many employees remain vulnerable to job loss. “There is still a risk of layoffs to many employees, and unemployment remains above what it’s been historically,” says John Morgan, senior vice president at Lee Hecht Harrison in New York, a career consulting firm. "So it’s really important that you brand yourself correctly within your organization as it’s reorganizing, that you clearly establish yourself as part of the ‘critical talent' segment, and that you let your manager and your manager’s manager know about the value you bring to your organization.”
Morgan points out that unemployment levels vary widely across education and skill levels, and that “white collar unemployment is really only about three or four percent. If you have highly specialized skills, I don’t think that risk of mass layoffs is really there.” But that depends entirely on the field in which one is employed. “Health-care workers really shouldn’t be that concerned with losing a job right now,” says Morgan. And despite the news from Cisco, most technology companies are hiring; anyone with a software engineering background is in good stead. But people in weaker industries, such as media or finance, may still be vulnerable, especially if they work in back-office or “inward-facing” jobs. “Ask yourself, ‘What skills am I really bringing to the table that separates you from everybody else?’” he says.
Overall, 1,397 employers initiated mass layoffs in the first quarter of 2011, affecting 190,895 employees. That’s way down from 2009, when employers laid off more than 800,000 people during the first quarter. But with unemployment stuck at 9.2 percent, workers laid off at this point in the recovery face a very difficult job market. The number of long-term unemployed (those who have been jobless for 27 weeks or more) has remained at 6.3 million, or about 44.4 percent of the unemployed, for several months.
“The problem for the job market isn’t layoffs and cost-cutting, it is the lack of hiring,” says Mark Zandi, chief economist at Moody’s Analytics. “The layoff rate is very low by historical standards, but the hiring rate is even lower. Large and mid-sized companies appear to be nervous about the policy environment, most importantly being whether and how policymakers will address the nation’s fiscal problems.”
Jennifer DePaul contributed reporting to this piece.
More jobs coverage from The Fiscal Times:
The Robot Revolution: Your Job May Be Next
Dept Talks Unintended Consequences: Job Losses
Adapt of Die—Some Jobs Are Never Coming Back