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Tech sector job cuts are at lows not seen since shortly after the recession, finds a report released the week of April 10 by employment consulting firm Challenger, Grey & Christmas.
“Job cuts are really down significantly from where they were a year ago,” John Challenger, the Chicago firms CEO, told eWEEK. “The companies and the whole industry are being much more cautious about letting people go.”
Tech sector job cuts announced in the first quarter plunged by nearly 34 percent to 39,379, compared to cuts of 59,537 in the first quarter of 2005. As the fourth consecutive quarter in which cuts were below the year-ago level, this could be the best time for tech workers in years.
“Spending is up and will continue to be up during the year, which is good for the industry. Companies have had a strong year profitability-wise and theyre reinvesting back into their technology, some for the first time since the recession,” Challenger said.
Of the 39,379 job cuts announced in the first quarter of 2006, the axe fell largely on telecommunications workers, with a loss of 23,791 jobs, followed by computer workers, with 10,711 jobs lost, and electronics workers, with 4,738 jobs lost. E-commerce employees were affected the least, with a loss of only 139 jobs.
While 43 percent of tech sector job cuts were due to mergers, Challenger argued that this is actually a sign of a strong economy.
“The cuts that were seeing in telecom arent because companies are doing poorly, its actually occurring because companies are buying up others and consolidating. In times when the economy is good, mergers and acquisitions grow, and companies consolidate. Downtimes are less, and people move into better jobs sooner. It may even serve to redistribute people to where the growth is.”
With the national unemployment rate down to 4.7 percent, the lowest since the summer of 2003 when it peaked at 6.3 percent, employers are increasingly focused on holding onto the workers they have.
“Companies are shifting their human resources strategy from downsizing and trimming to retention. We see companies rolling out more perks, soft benefits, signing bonuses, tuition reimbursements and flexible hours, trying to build a retaining culture,” Challenger said.
According to the report, tech sector jobs amount to 15.4 percent of all jobs cut so far in 2006, and 16.3 percent of jobs cut during 2005. The percentage of jobs cut that are tech jobs has been on the decline for the last five years.