Financial services companies have now slashed almost 200,000 jobs since the credit crunch began last year, and the pace of cutbacks is expected to accelerate considerably over the next several months.
Since August 2007, financial institutions have acknowledged eliminating at least 197,300 jobs, according to Chicago outplacement firm Challenger, Gray & Christmas. That’s roughly the same number of cuts announced in the prior three years combined.
Oddly, despite the meltdown on Wall Street in September, there were only 8,200 jobs lost in the financial services sector last month. That’s likely to pick up substantially, however, noted John Challenger, the firm’s CEO. He said workers employed at companies such as Lehman Brothers and Merrill Lynch were expected to be let go over the remainder of 2008.
“It will get a lot worse before it gets any better,” Challenger said. “Much of the turmoil that swept the investment banking and brokerage industry last month has not translated directly into job cuts yet.”
Indeed, UBS officials said Friday, October 3, that they would eliminate 2,000 jobs in the company’s investment banking division. With Lehman filing for bankruptcy, Merrill being acquired by Bank of America, Washington Mutual being taken over by JPMorgan Chase, and AIG getting an $85 billion lifeline from the federal government, there will be at least 50,000 more jobs lost in the financial services industry before the end of the year, Challenger speculated.
He added that the job losses are hardly limited to the financial services sector anymore and pointed to the employment figures the Labor Department released Friday: Employers cut their headcounts by 159,000 workers in September, the largest single one-month decline in more than five years. That’s a much more significant reduction than the decline of 100,000 jobs many had forecast for the month, and brings the total job losses for the year to 760,000.
Manufacturers cut roughly 51,000 jobs last month, while retailers eliminated 40,000 positions.