Had the video been released in 2021, Meta would have likely loved it. A young employee showing off the perks of her role would have dovetailed perfectly with the company’s enormous hiring drive during the first two years of the pandemic when it hired an extra 27,000 people.
Instead, it landed with a clang in October, as the company belatedly began to realize that things had turned south. It cut 11,000 jobs in November, heralding all the other companies’ cuts to come.
And as brutal as those job losses were for the employees who lost their incomes, they were just a patch on even the hiring that Meta had done earlier that year, when the Wall Street Journal reported it had hired about 15,000 staff.
That is the first lesson from the video: technology companies went way over their skates during the pandemic, far more than most sectors of the economy. The pullback was inevitable and embarrassing to companies that bill themselves to investors as building the future.
This mood was exemplified in a typical mea culpa from Tobias Lutke, the boss of online store platform Shopify, who thought the lockdown-driven surge in digital sales would be permanent: “Ultimately, placing this bet was my call to make, and I got this wrong.”
One senior Australian technology industry figure who I spoke with anonymously so that they could provide a candid take on the situation said this: “I don’t think the decisions [to hire at a great pace during the pandemic] were malicious (ie we know we will fire some of these people) but rather had very little deep thought as to where the new normal will sit.”
Facebook owner Meta was one of the first tech giants to cut jobs last November.Credit:AP Photo/Tony Avelar
In other words: demand for products and services online was booming as the world suddenly shifted to working from home and governments flooded the economy with stimulus money, how could that not keep going forever at the same rate? Technology is an innately optimistic industry, and almost no one wanted to answer that question.
The second lesson from the video protagonist’s charmed life is that in their quest to hire so many staff, so quickly, and for jobs that can sometimes be mundane, technology companies went all out on perks and pay. They spruiked free snack bars, wellness budgets, multi-acre rooftop gardens and rock climbing walls, plus the pay packets that largess suggests.
The rest of the economy did not. Data from the Fair Work Commission shows private-sector enterprise agreements, which tend to set the pay in unionized workplaces, recorded average annual pay rises of less than 3 percent in the September quarter. That is less than half the rate of inflation, which was running at 6.9 percent in October.
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That wage restraint by employees should mean bosses have less reason to cut jobs.
None of this is a plea for alms for the tech industry. That would be foolish when, for example, Google’s profits last quarter were 27 percent down on the year before but still came in at $US13.9 billion. The general trends in favor of the technology industry are as durable as ever.
But we should calibrate our fears for the rest of the economy. Job losses will still happen there. The sharp housing downturn and energy price rises will see to that. Fortunately, unemployment is near historic lows but for those who lose jobs, it will hurt badly.
Yet the sharpest cuts, with tens of thousands of workers sacked in one fell swoop? That, hopefully, should remain the preserve of the technology scene.
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