Taxi giant Lyft will freeze all hiring in the United States until the end of the year, just days after buy-now-pay-later (BPNL) leader Klarna embarked on its second round of layoffs this year.
Lyft, which cut nearly 60 jobs in July, has been having a hard time with increasing expenses as experts warn of a looming recession.
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Despite going on to clock in a record quarter in August after cutting costs, the company warned that it would continue to face challenges due to rising inflation and insurance costs.
The California-based company’s stock plummeted by over 68% in 2022, Reuters reported.
As well as Lyft’s freezing of new employment, Klarna has embarked on its latest round of firings just four months after it let go of 10% of its workforce.
Camilla Giesecke, Klarna’s COO, said the BPNL giant needed to make further cuts to a number of departments, including IT and recruiting, in order “to reflect the more focused nature of today’s Klarna”.
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By GlobalDataLyft and Klarna aren’t alone with their talent turmoil
Lyft and Klarna aren’t the only suffering from hiring freezes and layoffs. Robinhood, the stocktrading app that went public last year after the pandemic set its growth into hyperdrive, announced in April that the fintech would lay off 9% of its staff.
Australian BNPL company BizPay laid off 30% of its workforce in May, quoting tougher market conditions as the reason behind it. Then Mainstreet’s CEO announced on Twitter that about 30% of its workforce would be shown the door.
The fintech sector is not alone. The tech industry in general has made similar layoffs. Home-workout startup Peloton axed 2,800 roles in February. Netflix chopped its staff numbers at its fan site Tudum in May.
On Deck, a matchmaker for VCs and founders, has also reportedly laid off 25% of its staff. Customised celebrity video platform Cameo has fired 25% of its staff.
Not enough being done to create new talent
While the looming threat of a recession and the Great Resignation following the pandemic have certainly created more strain on businesses’ ability to retain talent, there are also other factors to consider.
Mark Chaffey, CEO and co-founder of Hackajob believes not enough is being done to create new technical talent, despite the demand growing.
Chaffey says that salary expectations in the tech industry are at an all-time high, putting more of a strain on companies.
“Salary has always been a big topic of discussion when it comes to tech jobs especially as the demand for talent continues to soar whilst the supply struggles to catch up,” Chaffey said.
“We’ve seen this over in the US where the average tech salary is a staggering 120% higher than in the UK. The report shows that 16% of candidates have declined a role as it didn’t meet their salary expectations.
“If they think a prospective company is being tight-fisted, they may begin to imagine what else the company could be ungenerous with.”
GlobalData is the parent company of Verdict and its sister publications.
