PayPal faces job cuts amid economic slowdown; 2,000 employees axed
PayPal has announced that it is axing 2,000 employees or roughly 7% of its workforce. As per president and CEO Dan Schulman, the layoffs will take place over the next few weeks, and some parts of the company will be more affected. To note, PayPal is not the only one on a firing spree. Tech giants like Microsoft and Google have taken similar steps.
Why does this story matter?
- Tech companies experienced a growth spurt during the COVID-19 pandemic but now the situation has changed.
- Every firm is axing employees left and right, and the same is true for PayPal. Last year marked the lowest level of growth in its history as a public company, and now it wants to change this.
- The employees are certainly in for a bumpy ride.
Company working on right-sizing cost structure: Schulman
Schulman has cited the "challenging macroeconomic environment" as the reason behind the layoffs. "While we have made substantial progress in right-sizing our cost structure, and focused our resources on our core strategic priorities, we have more work to do," he said. It is important to note that PayPal's stock has taken a heavy beating as the effects of the pandemic have started receding.
How will the laid-off employees be aided?
Schulman expressed his gratitude to the laid-off workers and claimed that they would be treated with "utmost respect and empathy." He also said that PayPal will give them "generous packages," provide consultation services when required, and ultimately aid in their transition elsewhere. The top boss stressed the need to tackle the challenge posed by the layoffs "head-on together."
What's the reason behind the layoffs?
During the COVID-19 pandemic, lockdowns spurred people to make purchases online. In turn, PayPal hired more people to deal with the pressure. Once the lockdowns were removed, customers started reverting to in-store shopping, making several jobs redundant. This also resulted in a growth slowdown in payments volume on PayPal and affected its stock prices. Axing jobs is thus a way to reduce expenditure.
These companies are axing employees too
Google has decided to lay off roughly 6% of its workforce or 12,000 employees. Microsoft has cut 10,000 jobs, while Philips has fired 6,000 workers. Finally, Meta axed over 11,000 employees in 2022, and more cuts might be on the way.