HSBC has announced it will cut 30,000 jobs from its payroll, amounting to about 10% of its global workforce, despite having announced rising profits in all global markets, to the tune of about $11.5 billion for the first six months of 2011.
This comes on the heels of corporations worldwide announcing record-breaking profits at a time when the global economic recovery seems to be slowing, with little or no job growth in many regions, particularly the United States. Though billed as a cost-cutting measure, as it may very well be, one can’t help but wonder how critically important it was to cut the employment budget when profits earned could just as well have been distributed to those same individuals at the rate of almost $400,000 each. Not a good business measure, of course, but tightening the purse strings was clearly not unavoidable in this case. This also comes after the previous announcement of axing 5,000 other jobs.
HSBC does plan to recruit new employees in coming years, and claim the job cuts will not be as significant as thus far enumerated, but this will be a mitigation rather than a full replacement. While fair enough to streamline its operations, and it has decided to shut down its Polish and Russian businesses, as well as sell off hundreds of US locations and assets, to buyers including M&T and First Niagara.
While done in the name of streamlining and to be expected during a rather tumultuous beginning of a new decade, HSBC’s job cuts have become rather par for the course in the big business industry, whose rising profits often lead to little or no significant gains in terms of job growth, sustainable investment or development for regional societies at large, and whose cost-cutting measures rarely coincide with forfeited bonuses or executive salary pay cuts.
Japan, meanwhile, has something of the opposite approach, with CEOs and other high-level executives docking their own pay to help weather the storm of uncertain economic realities. While American and other companies have been known to do the same thing from time to time, there is certainly something about the culture of global corporate profit-seekers than dissuades them from pursuing such self-effacing altruism. Whether this is sustainable in a worldwide economic downturn is also a serious question, as increased unrest has historically led to rather significant upheavalâ€"â€"something the West has not had to experience for quite some time, as it barely remains in living memory.
Though, of course, HSBC has every right to pursue whatever profit-driven path they so desire; but of course, when the time comes for lawmakers and voters to alter the state of the economy to suit whatever purposes they see as best, these sorts of things should be recalled rather less than fondly. These are not job-creating organizations in so much as they are wealth accumulation mechanisms, and the combined lobbying efforts of the banking sector should in no way seek to sweep these sorts of issues under the rug. While fair game to cut back, it’s also fair game to seek banking services elsewhere.
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