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An article relating to this blog post on Finextra:

Jobs bloodbath as Citi takes the axe to 52,000 staff

Stumbling banking giant Citigroup has stunned Wall Street by announcing plans for a further 52,000 job cuts.


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Staff genocide!

Whew!  52,000 jobs at Citi are going to be axed. This must be a new record on job cuts by a running firm.  Citi's communique in their town hall yesterday makes an interesting read. See http://www.citigroup.com/citi/fin/data/p081117a.pdf

Clearly, with institutions jostling each other on job cuts, we are in for a long recession just by creating one!  I really don't see the point here. How can world economies recover if companies keep putting more logs into the already raging fire? To cut 20% cost, surely, can't institutions simply enforce a wage cut across the board? Wouldn't that make more sense? At least you save on the severence pay and the overall morale remains high. Engaging in such a mass genocide of retrenchments is only going to drag us down deeper into the morass. The investors aren't really impressed by such tactics. Stocks of companies making such announcements plummet further.

So, what do we do? Play the game by precedence or take a balanced view and attack costs without causing mass mayhem? I would firmly recommend the latter.

We have Troubled Asset Restructuruing Programs for banks. Going by the famous cliche -"employees are our most valuable assets" - staff in banks need a bailout scheme too! 

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Comments: (1)

A Finextra member
A Finextra member 19 November, 2008, 03:54Be the first to give this comment the thumbs up 0 likes

True, Banks can reduce wages across rather than cutting jobs. But  i believe the question here is not only to save on salary expense, but also to deal with office premises expenditure and huge fixed and variable infrastructure costs.