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Spotify to shed 6% of its workforce; Walmart boosts pay and perks
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Music streaming company, Spotify – a company that has never posted a full-year net profit – has become the latest casualty in the tech sector. This week it announced it would be cutting 6% of its workforce – some 600 employees – many of which are expected to be in the US. Spotify’s severance-related pay (averaging around five months’ pay per employee), is expected to cost the company around €35m (£30m), but in a letter to staff, CEO Daniel Ek admitted he had been too quick in growing the company’s headcount. The memo said: “We’ve made the difficult but necessary decision to reduce our number of employees…In hindsight, I was too ambitious investing ahead of our revenue growth. And for this reason, today, we are reducing our employee base by about 6% across the company. I take full accountability for the moves that got us here today.” Ek added that his focus was on ensuring “every employee is treated fairly as they depart.” All staff will be able to access outplacement services for two months, and healthcare will continue to be provided during employees’ severance period. Spotify had about 9,800 employees at the end of its third quarter in 2022. The company reported a net loss of €166 million ($181 million) in the third quarter, compared with a €2 million profit in the same period of 2021, with sales increasing 21% to €3.04 billion. The company employs 5,400 people in the U.S. and 1,900 in Sweden.
Walmart is tackling the cost of living crisis and the tight labor market in a single swoop, by announcing it is raising its minimum wage for store employees to $14 per hour. Starting in March, the rise represents a 17% jump for the lowest paid workers, and now means the average store employee will earn between $14-$19 per hour. All-told, the average Walmart employee will now earn $17.50 per hour. The move will see around 21% of its total headcount of 1.6 million get a pay rise. Speaking to CNBC, Gregory Daco, chief economist at EY Parthenon, the global strategy consulting arm of Ernst & Young, said the move has likely been done to tackle employee churn. Joining the wage hike are other new perks too. Walmart also announced it is adding more college degrees and certificates to its Live Better U program, which covers tuition and fees for part- and full-time workers. It is also creating more high-paid roles at its auto care centers and recruiting employees to become truck drivers, a job that can pay up to $110,000 in the first year.
Industry experts claim it is Indian IT workers who are being disproportionately impacted by the wave of tech job losses, with some estimates suggesting that between 30 and 40% of them are Indian IT professionals. It is being claimed that these workers – many of which have H-1B and L1 visas – are now desperately trying to to find new employment within the timeframe that their visa allows, so they can stay in the US. According to India Today many Indian IT professionals who are on non-immigrant work visas, like the H-1B or L1, must find a new job within 60 days or face being forced to return to India. The H-1B visa holders who have been laid off must either find an H-1B-sponsoring job in 60 days or leave the country within 10 days of losing their status.
The number of people with disabilities in the workplace has already reached pre-Covid-19 levels – a mark reached ahead of those without disabilities, according to new research released this week. Analysis of the National Trends in Disability Employment (nTIDE) 2022 Year-End Special Edition reveals that people with disabilities reached beyond pre-Covid-19 levels in stark contrast to those without disabilities, who have not yet reached pre-pandemic levels. The average monthly employment-to-population ratio for people with disabilities (ages 16-64) increased from 31.3% in 2021 to 34.8% in 2022, which was also higher than the 29.1% recorded in 2020. In contrast, for people without disabilities (aged 16-64), the employment-to-population ratio increased from 72.5% in 2021 to 74.4% in 2022. Although this was higher than the 70.0% recorded in 2020 it was not above the 74.6% recorded in 2019. “Labor shortages across the country meant that there was a disproportionate demand for workers compared to the number of people willing to fill positions. Hiring managers may have needed to break outside of their comfort zones to consider different segments of workers,” said nTIDE co-author John O’Neill, director, Center for Employment and Disability Research, Kessler Foundation. He added: “This likely led to a boon for people with disabilities looking for jobs and becoming employed.”
Gallup – the organization that reads the temperature of employee engagement – has this week revealed that last year, overall staff engagement continued its downward trend first observed in 2021, falling by two percentage points to 32%. ‘Active disengagement’ increased by two percentage points compared to 2021 and four points compared to 2020, and now stands at 18%. Average annual engagement scores saw their first fall in a decade in 2021, and so this latest update suggests there is a long road ahead to get engagement back up to its pre-Covid-19 levels. According to Gallup actively disengaged employees are “disgruntled and disloyal because most of their workplace needs are unmet,” and according to the data, the engagement elements that have declined the most include clarity of expectation; connection to the mission or purpose of the company; opportunities to learn and grow; opportunities to do what employees do best and feeling cared about at work. Gallup also found a six-point decline in the percentage of employees who are extremely satisfied with their organization as a place to work.
According to LinkedIn, the role of ‘employee experience manager’ is now the fifth-fastest growing job in the US, This is according to LinkedIn’s newly published 2023 Jobs on the Rise list. Significantly, HR functions occupy three of the top eight spots, with other fast growing roles including “human resources analytics manager,” and diversity and inclusion manager (ranked the third-fastest growing job). Said Andrew McCaskill, a LinkedIn career expert: “A lot of jobs on this list are ones that help companies do more with less.” He added: “HR is indispensable as employers are trying to meet the demands of their workers. DEI work has become even more important so that the employee experience is universal and inclusive for everyone. Workers have a lot of options and they want to be at places where they feel valued.”
A new survey has painted a grim employment outlook for this year, with the latest National Association for Business Economics (NABE) survey suggesting one-in-five employers (20%) will cut headcount this year. According to the survey, more respondents said they expected to see falling rather than increased employment at their firms in the next three months. The last time this metric was reached was during the height of the Covid-19 pandemic in early 2020. Only 12% of those surveyed said headcount would rise in the next three months – less than half the share that said their companies had increased employment over the past three months. The rise in job cuts is thought to be linked to increased pressure on profits. The data revealed that 40% of respondents said their companies’ margins had declined over the past three months, up from less than a third in the July and October surveys. NABE president, Julia Coronado, founder and president of MacroPolicy Perspectives LLC, said: “Fewer respondents than in recent years expect their firms’ capital spending to increase in the same period.”