From the end of 2022 to the middle of 2023, Big Tech employers laid off 300,000 workers globally. Between January and May 2023 alone, there were approximately 2,300 redundancies in the Irish tech sector, including at companies like Google, Meta (Facebook), Stripe, Salesforce, Microsoft, X (formerly Twitter) and Zendesk. For some, the development was a surprise; these had been the darlings of the business press, emerging unscathed from the debacle of the Great Financial Crisis and very much a safe bet given how so much of what they do is insinuated into our everyday life. In Ireland, there has been a significant increase in the number of redundancies within Big Tech, and indeed Ireland accounts for the most sizeable proportion (around 40%) of redundancies in the tech sector.
The sector was subject to what the former Federal Reserve chairman Alan Greenspan famously called “irrational exuberance”. Big Tech went on a hiring spree in light of the high rate of accumulation experienced during the pandemic. Like all optimistic capitalists in the heat of an upswing, they were in part forced by the coercive law of competition to expand but also in part by the optimism such upswings engender in themselves: Big Tech capitalists expected the temporary uptick in demand for their services generated by the pandemic to be the new normal. Of course, it wasn’t. A slowdown in advertising revenue soon followed under broader macroeconomic pressures emerging in 2022. Thus, Meta, for example, almost doubled its headcount from 2020 to 2022 but ended 2022 by organising layoffs, dismissing 21,000 employees globally between November 2022 and March 2023.
Yet, it is worth considering additional factors based on understanding financialised monopoly capitalism. Fusing finance capital with monopoly capitalist firms drives much of corporate governance. Firms are highly responsive to the diktats of the capital markets. The coercive law of the capital markets dictates the need to maximise returns to shareholders and boost shareholder value (often through share buybacks). Another way to increase value is to cut costs; in some cases, cost cutting is not driven by operational requirements but rather to send positive messages to the market. Financial markets react well to announcements relating to cost reductions, particularly redundancies. Share prices tick upwards. That often causes corporations to behave in a copycat fashion, so when one announces ‘redundancies,’ others follow. At the point of production in the labour process, workers experience value extraction via cost-cutting with job loss, outsourcing and increased insecurity.
In addition, we might also speculate that another factor at work is labour disciplining. Michael Kalecki, the post-war Polish economist, famously claimed that:
“‘Discipline in the factories’ and ‘political stability’ are more appreciated by business leaders than profits. Their class instinct tells them that lasting full employment is unsound from their point of view and that unemployment is an integral part of the normal capitalist system”.
Wage gains for the modern working class in the sector have grown substantially in recent years compared to more stagnant labour markets in other parts of the economy. There have also been rising aspirations for flexible homework (often to the chagrin of Big Tech employers) and, in some cases, nascent forms of collective mobilisation (Alphabet Union) and walk-outs (on gender discrimination). In other words, labour may well have been exerting its interests a little too much for the liking of their employing capitalists. According to US tech magazine Hired, in its 2023 State of Tech Salaries Report, job losses in the sector dampened wage gains and expectations. In the US tech sector for examples, jobs saw an up to 9% decrease in hiring salaries, unprecedented in recent years. Creating insecurity and enlarging the sector’s reserve army may have thus disciplined labour. It’s tempting to suggest then that job cuts served a dual purpose: sending a favourable message to the capital markets while disciplining labour in Big Tech’s factories.