The prevailing inflation, which has reached its highest level in recent years, coupled with the consequences of the ongoing Russia-Ukraine conflict on the economic landscape, is influencing companies' choices to downsize their workforce in Europe.
The trend of workforce reduction has gained momentum since the start of this year, impacting a minimum of 140,000 individuals. Sectors such as telecommunications, information technology, automotive, and retail have been particularly affected by these layoffs.
Despite central banks' interest rate hikes, the persistently high and unconventional inflation amid worsening macroeconomic outlook is pushing more companies to speed up layoffs in order to reduce costs.
While the European Central Bank (ECB) has taken the fastest tightening step by raising interest rates by a total of 400 basis points since July 2022, the inflation rate reached 6.1% last month in the Eurozone.
The Bank of England, on the other hand, has been pursuing a tightening policy since December 2021, raising interest rates for the 12th consecutive time to 4.50%.
Although inflation in the UK decreased from 10.1% in March to 8.7% in April on an annual basis, it continues to remain stubborn.
The layoffs that have spread across almost all sectors since the beginning of this year include the recent decisions by Autoliv, a Sweden-based company, to lay off 8,000 employees.
Stora Enso, a Finnish paper and packaging manufacturer, will close four of its facilities in Europe and lay off 1,150 employees.