- While Big Tech is on a bad streak – and is chaining layoff plans around the world, they are meeting a lot of resistance in France and Germany
- Both countries have a particularly protective labor law
- Suddenly, while elsewhere, these groups resort to dry layoffs, Google and Amazon are forced to favor costly contractual terminations
It’s no secret: the United States, where Big Tech was born, is a particularly flexible country in terms of corporate and labor law. While European countries are generally more “rigid” and protective of employees. However, obviously Google (Alphabet) and Amazon seem to be discovering this reality on the Old Continent – a few weeks after the announcement of massive layoff plans all over the world.
Google and Amazon announced earlier this year the most massive layoff plans in their history. These two groups, which had so far experienced almost uninterrupted growth, wanted to part with 27,000 and 12,000 employees respectively in the United States and around the world. The result of a strategy driven by the COVID-19 pandemic – which temporarily boosted the tech sector before the “return to normal life” forced them to back down quite abruptly.
Google and Amazon discover that laying off employees is expensive in Europe…
Because in addition to the cost of these massive recruitments during the pandemic, these companies, like the rest of Big Tech, have to deal with an economic situation that is becoming less favorable to them. The regulatory environment is drying up advertising revenue on the Google side. At Amazon, it is online commerce that is suffering from turbulence amid inflation, lower household spending and a resumption of purchases in the traditional economy, stores and other points of sale.
These layoff plans are therefore crucial for both Google and Amazon to enable them to regain competitiveness. Even if the timing, especially on Google’s side, seems somewhat cruel: the arrival of ChatGPT just after the first round of layoffs, and its successful integration into Bing threatens Google’s ability to position its AI Bard on the market. This now puts it at risk of losing many users in the online search segment – which remains its most strategic segment.
Overall, both Google and Amazon have had relatively little trouble carrying out their layoff plans – though it’s hard not to say it’s attracted a bit of bad press at times. But the game was much more complicated for these groups in France and Germany because of protective labor law to which they were obviously not at all accustomed.
Alphabet employs some 1,600 people in Paris – and is currently forced to negotiate with the unions. On the table, there is no question of any dry or forced dismissal. Instead, the group is forced to adopt a voluntary departure plan and individually negotiate conventional terminations with payment of compensation – which should weigh on its accounts.
To make it even more difficult for them, the trade unions of several European countries have decided to come together in a new one and have set up a European Works Council (EWC). This makes it possible to coordinate the trade union organizations representing France, Germany, Ireland, the United Kingdom and Switzerland within these organizations and to give them more strength in their negotiations.
Amazon is for its part forced to comply with the same kind of negotiations for its 1,500 employees (in France). Even if the firm is often more aggressive, notably by breaking contracts still in the trial period.
