Seventy percent of the people told they would be laid off last month received the dreaded pink slip from one of two employers: Bank of America and the U.S. Army, according to a report by released Wednesday by a global outplacement firm. The prospects for employees of those two entities could not be more different.
Challenger, Gray & Christmas Inc. reported employers announced plans to reduce payrolls by 115,730 workers in September, more than twice the 51,114 announced in August. Roughly 80,000 of those cuts related directly to announcements of troop reductions made by the Army or vast cuts in the retail business of Charlotte-based Bank of America.
But it is unlikely those two organizations will share a similar headline again. While the Army has been on what the report called a “very corporate-like […] plans to achieve the reductions,” it is unlikely cuts will go much deeper. Earlier last month, General Raymond Odierno, the Army chief of staff was quoted by Reuters as stating he would not want to go below a troop level of 520,000.
“I'm comfortable at 520. Do I think we're going to end up at 520? Probably not, he told the wire service. The Army’s currently employs about 49,000 more troops than that. Barring major shifts in the foreign policy or geopolitical standing of the United States, it is unlikely to announce the types of staff reductions it noted last month.
Bank of America, on the other hand, is precisely the kind of enterprise facing the possibility of having to make major lay-off announcements on a regular basis for months to come. Bank of America’s plans to lay off 40,000 announced in September only seem to be the tip of the iceberg at that corporation, according to various emails leaked to financial services industry blog Dealbreaker.
It is not the only big bank to implement mass firings this year. In January, Barclays Capital began slashing the payroll, dumping 10% of its U.S. investment banking unit and telling the bankers left behind they would receive no bonuses for 2010; the bank expects to shed about 3,000 this year. Morgan Stanley started its own decimation by laying off hundreds of its “trainee” brokers (who had less than 36 months of experience) in March; it was reportedly wielding the ax again as recently as June.
The European banks, particularly exposed to the sovereign debt crisis in the Continent, are faring at least as badly. In August, Royal Bank of Scotland, where rumors of layoffs had circulated all year, said it would be letting 2,000 bankers go, as part of a dubiously-named “Change the Bank” initiative. Credit Suisse and UBS reported in July they would be sending 1,500 and 5,000 employees, respectively, to the unemployment rolls. And while UBS has not announced any particular layoffs directly resulting from its $2.3-billion rouge trader loss last month, the wide expectation is that heads will roll.
In other words, as a Challenger, Grey report noted, all this is just “a sign of more cuts to come.”