Issue of the week: Massive layoffs, with no end in sight

Last week Citigroup CEO Vikram Pandit announced that Citi would eliminate 52,000 jobs, one of biggest job cuts in U.S. history. Throughout the country companies are shrinking their payrolls.

Citigroup CEO Vikram Pandit this week stunned an auditorium full of employees—not to mention the global financial community—with the news that Citi will eliminate 52,000 jobs from its payroll of 352,000, said James Politi in the Financial Times. Not all the cuts are from direct layoffs—about half the reductions could come from the eventual sale of some Citi operations. But the bank’s securities-trading and mortgage-packaging ranks in New York and London will be drastically thinned. And the psychological effects of one of the biggest job cuts in U.S. history could be devastating. The layoffs “reinforce fears that the worst of the hit to employment from Wall Street’s struggles still has to make its way through the U.S. economy.”

The next wave of pink slips could be just weeks away, said Todd Wallack in The Boston Globe. In past recessions, monthly layoffs have spiked in December, as “executives typically scramble to hit profit targets and prepare budgets for the following year.” The mutual-fund industry, for instance, has already been rocked by layoffs at Fidelity and Putnam, and other fund companies will probably trim payrolls next month. “It belies the idea,” said employment consultant John Challenger, “that there is a taboo about firing workers between Thanksgiving and Christmas.”

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