Employee numbers will be cut sharply in many Western nations as companies pare costs to survive the global financial crisis, according to an international recruitment company boss.
Layoff plans are expected to gain momentum over the next six weeks as companies finish their budget-making exercises for the coming year, said Jeffrey Joerres, chief executive of US-based Manpower.
“Some of the companies will be acting pre-emptively [in reducing their payrolls]. Even if they haven’t yet been hard hit by the downturn, they’ll feel they must act conservatively,” Joerres said in an interview.
“They’ll feel they have to be responsible because they feel they can see trouble coming for their revenues and bottom lines,” he said on the sidelines of a World Economic Forum meeting in New Delhi, which wound up earlier this week.
“We expect the [job] situation will get much worse” he said.
He said unemployment could hit 7.5 percent or even 8 percent in the US — it’s now at a four-year peak of 6.5 percent, already slightly higher than in the last US recession in 2003.
In Western Europe, jobless rates will also rise, he said.
French unemployment could hit 9 percent, up from 7.2 percent, said Joerres, who heads the world’s second biggest staffing company behind Swiss-based Adecco, recruiting 5 million people annually in 80 countries.
Manpower, which is also feeling the impact of the crisis, reported last month it had swung to a third-quarter net loss of US$43 million from a profit of US$132 million in the same period a year earlier.
India, whose growth is slowing from scorching 9 percent levels, is beginning to feel the “pain” of the downturn, he said.
Manpower’s Indian operations, which represent less than 1 percent of its global US$21 billion business, have witnessed a 15 percent to 20 percent decline due to the “current meltdown,” Joerres said.
India’s economic growth is expected to slow to around 7 percent this year, and to as low as 5.5 percent next year.
“The speed with which this downturn has happened has taken us by surprise,” Joerres said.
The financial crisis has shown there is no “decoupling,” he said, referring to the widespread notion that the economies of big emerging nations would be insulated from any US downturn.
“The US first felt a series of shocks but it was slower, then Europe dropped faster, now it is Japan” which has slipped into recession, he said.
“The Middle East is also facing challenges — in Dubai, in construction for instance,” he said.
“It’s all showing that no-one is immune,” Joerres said.
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