After the first phase of job losses in the technology sector were announced late last year, a second round now appears to be underway. Meta, Facebook’s parent, has said it will cut another 10,000 jobs globally, after an 11,000 reduction last December. In addition, 5,000 planned new hires will not now go ahead. Other recent announcements of job losses came from Indeed, the jobs website and Amazon, as well as some smaller players.
How this ripples out through the economy was illustrated yesterday when Accenture, the consulting firm which provides outsourcing services to Facebook, announced it would cut 19,000 jobs worldwide, including around 400 in Ireland.
Industry figures have estimated that based on what has been announced so far, some 2,000 to 3,000 jobs could be lost in the sector here –and this is likely to rise significantly further. The context is an expansion of some 50,000 jobs in tech since 2018. Nonetheless, the downturn in the sector now looks likely to continue well into this year and some companies, including Meta, may emerge from it significantly smaller.
Ireland has not been worst hit in the first wave of redundancies, but nonetheless the losses are now mounting up. With labour shortages across the economy, many of those losing their jobs may quickly find new employment, though not always with the same terms and conditions.
The cutbacks in the sector also raise questions about the outlook for corporation tax. If the major tech players are making less profit, then they will pay less tax. There are a lot of different factors at play in the corporate tax take, but this bears watching.
There are longer-term questions, too, about where the sector goes from here. Tech will remain central to our lives and the business cycle will turn upwards again at some stage. However, the big players have faced questions over some of their practices – and some have taken what look like poor business bets. The future shape of big tech is far from clear.
There is little enough that Ireland can do in policy terms which will make much of a difference in the short term as this restructuring plays out. However, the challenge is to ensure that Ireland is well positioned to gain when the cycle turns again. Here, the existing strength of the sector and the strong skills base in Ireland should be a plus, as it has been in the past.
However, there are problems too, most of them by now well known. The shortage of housing – to buy or rent – is an increasing blockage for big companies. Ireland’s other infrastructure shortcomings – and the slow planning system – are also issues.
Ireland has work to do to underpin the welcome statistic which shows employment is now at a record high.