Job Cuts Reach 2-Year High — Why US and Puerto Rico Are Worst Places To Face Layoffs

Three Spots /
Three Spots /

The tight labor market that became one of the biggest economic stories of the COVID-19 pandemic appears to be loosening up considerably.

More Layoffs? Management Positions Could Be Next on Chopping Block
Passive Income: This Side Hustle Is Perfect for Introverts

Job cuts in January 2023 hit their highest point in more than two years amid a slew of layoffs in the tech sector, according to a new report from outplacement and executive coaching firm Challenger, Gray & Christmas. The report, released on Feb. 2, found that U.S.-based employers announced 102,943 cuts in January, up more than five-fold from the previous year and a gain of 136% from the 43,651 cuts announced in December 2022.

January’s total was the highest for the particular month since 2009, when 241,749 layoffs were announced at the beginning of the year. It was the highest total of any month since September 2020, when 118,804 job cuts were reported during the height of the pandemic.

“We’re now on the other side of the hiring frenzy of the pandemic years,” Andrew Challenger, senior vice president of Challenger, Gray & Christmas, said in a statement. “Companies are preparing for an economic slowdown, cutting workers and slowing hiring.”

The technology sector announced the most cuts in January with 41,829, or 41% of the total. That was more than double the 16,193 cuts announced in December 2022. Since November 2022, tech companies have announced nearly 111,000 job cuts. The list includes industry heavyweights such as Amazon, Meta, Facebook, Microsoft, Alphabet and PayPal.

Where Layoffs Hit Hardest

Mass layoffs are especially painful for workers in Puerto Rico and the United States, which rank as the two worst places to be laid off, according to one analysis conducted by Pennsylvania-based employment services platform Lensa released in January. It gave a rating to each country or region based on a combined ranking calculated from various factors such as unemployment rates, notice periods for redundancy, severance pay, and laws governing what employers must do to make things easier for laid-off workers.

The study found that Puerto Rico ranked as the worst region to be laid off in, with a score of 1.07 out of a possible 10. As Lensa noted, there is no guaranteed severance pay in Puerto Rico — even if you have worked somewhere for 10 years — and you can be dismissed without a notice period.

Take Our Poll: Do You Have a Second Job or Backup Plan in Case You Are Laid Off?

The U.S. ranked as second worst with a score of 1.12. Out of nine redundancy laws, the U.S. enforces only two of them, according to Lensa. You also get no legally guaranteed severance pay or notice period.

“The United States enacts a fast and impersonal approach to firing,” the report stated. “Employees typically have short meetings with an HR manager to explain why they’ve been fired, and are often given just a few hours or days to pack up and leave.”

By contrast, the two countries that ranked as the best to be laid off in — Sierra Leone and Egypt — offer much more protection to employees.

In Sierra Leone, employees are guaranteed at least a 13-week notice period before being laid off, and employees with a 10-year tenure can secure an up to 132-week severance pay package. Egypt offers 4.3 weeks guaranteed severance pay for workers with only one year of tenure. That guarantee rises to 54.2 weeks for employees with a decade or more of tenure.

Other countries that rank with the U.S. among the world’s economic leaders, such as Japan and Germany, are more generous to laid-off workers than the United States or Puerto Rico. Layoffs are rare in Japan, according to the study, and employees there have a legal right to reject early-retirement packages. German employers often let laid-off employees remain where they are for many weeks following a firing, allowing them to finish up projects and begin hunting for other jobs.

See: 5 Jobs That Are Most Vulnerable to a Recession
Find: If 70% of Millennials and Gen Z Quit, What Would Economic Impact Be?

In addition to Puerto Rico and the U.S., other countries that ranked among the bottom five include Nigeria (a score of 1.19 out of 10), New Zealand (I.44) and Djibouti (1.66).

The top five countries by score are Sierra Leone (8.80), Egypt (7.74), Moldova (7.72), Paraguay (7.27) and Zimbabwe (7.17).

More From GOBankingRates

This article originally appeared on Job Cuts Reach 2-Year High — Why US and Puerto Rico Are Worst Places To Face Layoffs