More jobs at risk at large companies

More jobs at risk at large companies

With an increased number of redundancies announced by larger companies in 2023, more jobs appear to be at risk this year. Last year, the number of redundancies announced due to bankruptcies was higher than usual, mainly by companies in industry and retail, according to ING Research. This year’s job market is likely to be under pressure, mainly due to reorganizations announced by manufacturing companies. At over 6,500 job losses, the figures are historically high for this sector.

Early this year, several Dutch newspaper reports appeared about medium-sized companies announcing redundancies in the Netherlands. Examples include lamp manufacturer Signify (500 job cuts), iron foundry VDL Castings (140 job cuts) and bicycle manufacturer Accell (150 job cuts). While this does not mean that everyone has to fear for their jobs, the question is whether this means a slight easing of the labour shortage. To see what can be expected, ING relied on a database from Eurofound.

While the actual number of employee jobs grew by 116,000 in 2023, the number of job losses announced rose from a net figure of just under 3,000 jobs in 2022 to around 13,500 jobs in 2023, the highest number since 2011. These restructuring announcements in 2023 are relevant to the expectation about developments in 2024, as it often takes some time for announcements to translate into actual job losses – and especially in the case of reorganizations. The higher figures thus suggest downward pressure on the employment market for this year.

Reorganizations are the leading cause of job losses

Fundamentally, reorganizations are by far the main reason why companies announce job losses. Reorganizations accounted for almost three quarters of the job cuts in 2022-2023. Bankruptcies (9%) or site closures (8%) come next as other major causes. Mergers and acquisitions (5%), offshoring/outsourcing abroad (4%) and outsourcing at home (1%) are less likely to be the reason.

Accounting for more than half, reorganizations appear to be the main cause of announced job losses in 2023 too. What is particularly striking, however, according to ING, is that last year the proportion (and number) of announced job cuts due to company or site closures (46%) was a lot higher than usual (17%). Almost 6,200 jobs were involved.

In the long term, there seems to be a correlation between the number of companies with 50-plus employees closing down and the number of announced job cuts, according to ING. Both are a lot higher in 2023 than in 2022. In other words, the disappearance of a number of medium-sized companies (or some of their locations) is now seeming to account for more job losses.

Manufacturing and retail are main sectors with job loss announcements

The job losses announced in 2023 were mainly in manufacturing (58% of that year’s total) and retail (33%). 2023 was a record year for announced job losses in manufacturing since the start of the study (in 2002). At over 7,500, they equal about 1% of the total number of jobs in the sector. This is probably due to a combination of high energy costs, overcapacity after the goods shortages during the pandemic, and the overall deterioration in global trade in 2023.

Within manufacturing, the announced job losses were mainly due to bankruptcies (1,120 jobs) and reorganizations (6,550 jobs) in particular. Meanwhile, announced losses in retail came purely from bankruptcies (4,360 jobs). Nevertheless, in 2023, manufacturing added 14,000 employee jobs on balance. However, given these announcements, a decline in 2024 now seems more likely. Moreover, the first announcements of job losses in 2024 once again came mainly from the manufacturing sector. This means that, according to ING, there seems to be a continuation of the 2023 trend for now.

Big corporations are most pessimistic

When looking at company size, pessimism about workforce growth appears to be mainly among companies with 250 or more employees (the ‘corporations’). This signal from large companies does not mean that everyone has to fear for their jobs, but it may be an indication that the labour market will become slightly less tight during 2024. ING’s expectation is a shift from ‘very tight’ to ‘tight’.