Opinion – Sarah O’Connor: Tech layoffs teach a lesson in ‘war for talent’

Once upon a time there were young graduates who thought they had a choice to make: they could be rich but unhappy in an investment bank or law firm, or they could live without a great salary but doing something fun. Then came the big tech companies. Suddenly, it was possible for someone with a certain skill set to have fun and get rich at the same time.

Tech companies seemed to represent a less hierarchical world of work, where everyone wore jeans and a T-shirt and merit was most important. Salaries were high and stock options plentiful. If you were lucky, your boss would also take care of the boring parts of life, washing your clothes, preparing your meals and taking you home at night. This year, tech companies represented five of the top ten places to work in the United States, according to employee reviews on the Glassdoor website.

Policymakers and economists soon came to see tech workers as the archetypal winners of the 21st century economy: firmly on the “lovely” end of the widening gap between “lovely” and “bad” jobs.

When some industry employees tried to unionize, the response from companies and investors was often to argue that these were already dream jobs, so what was the point? As one investor put it, tech workers trying to unionize were “appropriating the language of exploited coal miners while enjoying the most privileged office work experience in human history.”

That story has been punctuated by a series of mass layoffs at tech companies in recent weeks. Meta laid off 11,000 workers, or 13% of its workforce. Elon Musk, the new owner of Twitter, has cut the group’s headcount in half. Amazon plans to cut about 10,000 jobs, while private payments company Stripe has shed 14% of workers. It was a brutal experience for the employees. In most cases, the job cuts are the reversal of a recent wave of hiring — only Twitter is a slightly different story.

Tech companies bet on the continuity of an unusual macroeconomic environment that, in fact, was about to end. Consumers are no longer confined to their homes with only e-commerce to spend their money on. Interest rates are no longer at rock bottom.

It’s not the end of these companies. Meta still has more employees than last year. But the mass layoffs offer some lessons.

The first is that, whether they’re all wearing jeans or not, many tech companies are highly autocratic. It was impressive – and refreshing – to see chief executives take personal responsibility for layoffs. But it was also a reminder of how much power they have.

At Meta, for example, investors are increasingly frustrated with the amount of money chief executive Mark Zuckerberg was sinking into the “metaverse.” But Meta’s dual-share structure allows him, with 13% of the equity, to control more than half of the votes.

“I have made the decision to significantly increase our investments,” Zuckerberg wrote in a memo to the team last week. “I got it wrong and I take responsibility for it.”

The speed of layoffs at these global companies has also clashed with the spirit of labor laws in the UK and Europe.

“In many European countries, it is necessary to alert public administrations or workers’ councils or unions, even if the company is not unionized. It is necessary to have a plan that mitigates the social impact of its decisions”, said Valerio De Stefano, professor at of Law Osgoode Hall in Toronto (Canada). The idea of ​​these laws is not to prevent companies from making layoffs, he says, but to ensure they occur fairly and with due notice. “We have a very rude awakening right now, it’s happening without any control or consultation, just someone saying, ‘Sorry, it’s my fault’.”

For officials, the experience highlights the fact that benevolent dictatorships can look good until they are no longer so benevolent. Even people who have kept their jobs are seeing some benefits shift. On Twitter, Musk announced that everyone must work at least 40 hours in the office, changing the lives of people who planned to work remotely.

Unions hope the layoffs will help them make the case that unions are not just about trying to improve poor working conditions, but also about having a real voice and a seat at the table. Mike Clancy, secretary general of the British trade union Prospect, says the group has some members on Twitter and hopes to recruit more in the tech sector. “There’s often a progressive veneer — we’re all technicians together,” he says. 🇧🇷[O] The whole atmosphere is ‘we offer a different job offer’ kind of way – no, you don’t when it comes to layoffs, do you?”

The other lesson is to not get carried away by self-praise language about the “war for talent” that was ubiquitous in the tech industry until recently. There are talented people in all walks of life. What matters for wages is supply and demand. Underpaid workers in the US have been getting big pay raises in nominal terms this year. Nobody is calling this a “war for talent”; they’re calling it “lack of manpower”.

Tech companies may have offered incredible perks, but people don’t need dream jobs so much as jobs that treat them with decency. The problem with dreams is that they disappear when you wake up.

Translated by Luiz Roberto M. Gonçalves