The year 2022 has seen effects of recession on various industries of various countries but, this has not left even a group like Goldman Sachs which had aggressively increased staff during pandemic. The news now is that Goldman Sachs is planning thousands of layoffs.
Goldman who had absorbed around 49000 employees as of September is now planning to eliminate few thousand employees. The bank had 38000 employees at the end of 2019 and is still expected to have more employees than it had before pandemic.
In 2020 and 2021 many Wall Street Banks including Goldman hired employees in excess but the economic slowdown, war in Europe and rising interest rates has triggered a bearish trend in stock market and thus a slump in deal-making. It is also expected that Goldman will further cut the bonuses of employees who are underperforming as per some. Apart from Goldman, Morgan Stanley has also laid off a few along with cutbacks in other American companies.
The lay offs were suspended during pandemic in Goldman while job cuts due to under performance was still not considered. Even though Goldman is taking away bonuses in order to trim expenses, the staff still received their payouts tied to their performances just as other Wall street employees.
As the shares of tech companies are down drastically this year investment bankers, managing directors could also be hit by the wave of lay offs as per some people familiar with the economic and market situation.
The stock market in 2020 routinely touched new highs despite of the panic that gripped the market during the pandemic which circled and rallied the globe rapidly. And just as the over hiring and overpaying during good times has been Wall Street’s standing tradition so have the stooping in jobs and bonus cuts during the recession times.
Wall Street firms have been forced to halt the hiring spree and offering of big bucks to retain the employees because of the uncertain markets, recession at its lowest and corporate clients being jittery.
Morgan Stanley’s push into wealth and asset management and JP Morgan Chase & Co. consumer lending operations have made them less dependent unlike their rival Goldman but Goldman’s investment in banking and trading has made its stock prices more sensitive to ebb and flow of capital markets that its peer is also a prominent factor siding Goldman. It had announced drawing more attention to wealth and asset management business in October which can relatively clip steady fees.
Alan Johnson managing director at Johnson Associates said that, “We went from boom to bust immediately, so in hindsight probably over hired” he says explaining about the next years scenario as a compensation consulting firm specializing in the financial services industry.
It is also important to note that even Morgan Stanley earlier this month cut 2% of its global workforce representing some 1600 jobs which followed company’s acquisition of discount broker ETrade and fund manager Eaton Vance adding to 20000 more employees.
