Telecom Layoffs Continue to Decline

Employers for the fourth consecutive month planned fewer telecommunications sector job cuts.

Telecommunications sector job cuts fell almost 30 percent in the first four months of 2006, from 37,118 to 26,418, according to data released May 2 by Challenger, Gray & Christmas, a global outplacement consultancy.

A total of 315,566 jobs have been lost since January, down 8.5 percent from the same four-month period in 2005.

April 2006 layoffs fell 8.1 percent market-wide from their May 2006 level, with a total of 59,688 jobs cut in April 2006.

Of these April 2006 jobs cut, 6,611 were in computers, 2,627 in telecommunications, and 1,524 were in electronics.

"The slowdown in job cuts is a product of the strong economic performance in the first quarter, which saw GDP advance 4.8 percent, the highest gain in two-and-a-half years. Consumers are more confident, and business leaders are more confident and are focusing on worker retention," said John A. Challenger, chief executive officer of Challenger, Gray & Christmas, in a statement.

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State-for-state, Michigan has seen the greatest number this year (49,138), followed by California (39,277), Illinois (27,311), Texas (20,018) and New York (18,619).

"The expectation that a tight labor market automatically means higher wages is not working now. Simply put, until employers can sell the idea to customers that prices must go up, wage hikes will be few and far between. Perks, yes—flex-time, telecommuting —but not necessarily much more pay. Competitors will be quick to devour any attempt at hiking prices," said Challenger.

The reasons given in the survey for the majority of job cuts were unclear, with 10,710 respondents answering "no clear reason."

Meanwhile, 9,787 attributed the job losses to closings, 9,670 to restructuring, 9,663 to bankruptcy, and 7,130 to cost-cutting. Outsourcing, at No. 7, accounted for 2,123 job cuts.

Challenger says that declining job cut figures shouldnt be expected through the summer, as was historically the case until last summer, putting the blame on soaring gas prices.

"Higher gas prices were definitely a driving factor behind last summers job-cut surge. Gas prices around the nation have reached or surpassed $3 per gallon and are expected to go even higher in the coming months," said Challenger.

Announced hiring plans will account for 40,793 new jobs this month, but only 188 of them, or less than half a percent, will fall within the telecommunications sector.

However, this number shows growth from last month, when new telecommunications jobs accounted for just 0.1 percent of planned new jobs.

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