European companies continue layoffs due to stagnant economic outlook

Layoffs concentrate in automotive, engineering, banking, tech, oil, pharmaceutical sectors with no signs of slowing

Nuran Erkul Kaya, Bahattin Gonultas |19.10.2024 - TRT/AA



LONDON/BERLIN

European companies continue layoffs in the second half of 2024 due to a stagnant economic outlook.

The region seeks to reduce labor costs amid the effect of the Russia-Ukraine War on economies, structural problems in Germany and weakened consumer demand because of a tight monetary policy.

Inflation is higher than pre-coronavirus pandemic levels in Europe and it has consequently reduced the purchasing power of households, and as a result, the increase in interest rates to combat inflationary pressures has led to increased costs of loans for companies.

The decline in sales and profits of many European firms, as well as the resulting economic recession, are the main drivers for continued layoffs.

Layoffs span across almost all sectors, but they are mostly concentrated in the automotive, engineering, banking, technology, oil, and pharmaceutical fields with no signs of slowing.

The most recent layoff took place in the France-based aerospace firm, Airbus, which decided to cut up to 2,500 positions in its defense and space division by the middle of 2026.

As for other major European companies, which have made layoff decisions since July, Sweden-based battery maker, Northvolt, comes to the fore among engineering firms with its plan to layoff 1,600 employees as a cost-cutting measure to boost production capacity at its Skelleftea plant, according to the firm.

German railroad operator Deutsche Bahn announced it would lay off 30,000 employees in July, making up 9% of its total employment, while Swedish telecom operator Telia said it would terminate 3,000 workers this year.

German chipmaker Infineon said in August the firm would reduce employment by 1,400 worldwide and relocate the vacant positions to countries with cheaper labor costs.

International reports said Finnish tech firm Nokia is planning to lay off 350 workers in Europe and 2,000 in China.

As for banking firms, Norwegian financial services firm DNB said last month it would lay off 500 full-time employees within six months, while Italian bank UniCredit said Thursday it reached an agreement with its labor union to voluntarily lay off 1,000 and create 500 new jobs.

Meanwhile, on the retail and consumer goods side, home appliance firm Dyson decided to cut around 1,000 jobs in the UK in July as a part of its global restructuring plan, while multinational consumer goods firm Unilever announced the same month it would cut all office positions in Europe by a third by the end of next year.

News reports showed that the energy firm Shell plans to reduce employment in its oil and gas division by 20%.

Pharmaceutical firm Individor said in July it would lay off 130 employees, while Norwegian fertilizer maker Yara said this week that planned production changes at its Belgian plant could mean 115 employees would be laid off.

The BBC said this week that 155 employees would be laid off, while the English Premier League soccer club Manchester United is planning to cut around 250 jobs.

*Writing by Emir Yildirim in Istanbul