Great layoff looming: 60% companies will likely cut jobs in second half of 2024

As economic uncertainties persist and businesses grapple with evolving market conditions, a substantial portion of companies are gearing up for employee layoffs in the latter half of 2024. 

According to a recent survey conducted by ResumeTemplates among business leaders, a staggering 95% reported implementing layoffs during the first half of the year. These reductions varied widely, with 21% of companies letting go of 5% of their workforce, while 21% terminated 50% or more.

Looking ahead, the outlook remains bleak for many employees as 60% of surveyed business leaders anticipate further layoffs in the second half of 2024. Among them, 26% consider it very likely, and 34% deem it likely that their companies will implement workforce reductions. 

Conversely, 27% express doubts about layoffs occurring, with 12% believing it to be unlikely and 15% stating it to be very unlikely. An additional 12% remain unsure of their company's future staffing decisions.

Explaining the rationale behind these anticipated layoffs, Andrew Stoner, executive resume writer at ResumeTemplates, points to macroeconomic factors such as declining consumer sentiment and delayed interest rate cuts by the Federal Reserve. "Consumer sentiment softened slightly in June," Stoner notes, "and with the Federal Reserve maintaining steady interest rates for a year now, further reductions are expected, impacting layoff decisions."

The severity of these job cuts is evident, with 40% of companies planning to dismiss 30% or more of their workforce in the upcoming months. Forecasts indicate a range of anticipated layoffs: 5% of businesses expect to let go of 1% of their employees, while 19% foresee reducing staff by 50% to 90%, and 8% contemplate dismissing their entire workforce.

Multiple factors are driving these decisions, including stringent cost-cutting measures (60%), performance issues among employees (53%), the increasing role of artificial intelligence in displacing human work (51%), corporate restructuring (51%), adverse market conditions (45%), overstaffing (35%), and advancements in technology (31%).

Communication of layoffs typically occurs through in-person meetings (44%), followed by emails (26%), official letters (12%), virtual meetings (8%), instant messages (5%), and phone calls (5%). This direct approach aims to provide clarity and support to affected employees during challenging transitions.

Interestingly, the survey reveals a notable trend favoring employees with artificial intelligence skills, with 76% of business leaders acknowledging their lower susceptibility to layoffs. "This trend underscores the growing demand for AI proficiency in today's job market," Stoner explains, "reflecting employers' strategic intent to retain AI talent for future business innovations."

In terms of severance packages, responses vary widely: 4% of companies offer no severance pay, while 5% provide less than two weeks. Conversely, 22% offer two to four weeks, 27% provide one to two months, and 17% extend three to four months of severance. A smaller percentage of companies offer more substantial severance, with 11% providing five to six months, 3% offering seven to nine months, and 9% providing nine to twelve months. Only 3% of companies offer severance exceeding one year.

To mitigate the impact of layoffs, businesses also offer additional resources to displaced employees, including letters of recommendation (55%), continued medical benefits (46%), networking opportunities (44%), referral programs (42%), retraining programs (38%), mental health services (36%), temporary work assignments (34%), and alternative roles within the company (32%). However, nearly 7% of companies do not provide any additional support beyond severance.

"In addition to the immediate financial strain and loss of benefits, limited severance policies can exacerbate the pressure on laid-off workers," Stoner cautions. "This added stress can negatively impact performance and hinder their ability to secure new roles with suitable compensation."

As companies brace for further economic challenges and navigate evolving workforce dynamics, the emphasis remains on strategic planning, adaptive leadership, and prioritizing employee well-being amid uncertain times. The decisions made in the coming months will not only shape organizational resilience but also influence the broader economic landscape as businesses strive to navigate and thrive in a post-pandemic world.