Last week Uber announced its plans to lay off about 3,700 employees a figure that forms about 14% of its total workforce. This announcement follows the impact COVID-19 pandemic is having on the business and global economy at large.
With the novel coronavirus taking a sweep across the globe and forcing the world into what looks like a global economic recession and maybe a depression, several companies have resulted in laying off. For those companies that have retained their workforce, they have resulted in other means to thrive through the pandemic. Many of these companies have exploited the pay cuts of employees or temporary suspension of some staff options. All of these strategies are aimed at reducing operating expenses as a response to the economic challenges resulting from the pandemic.
With Uber still in operation partially, it has been gravely affected by the stay-at-home orders put in place by several state governments. According to a statement made by Dara Khosrowshahi the CEO of Uber, the cuts will affect community operations and recruiting majorly. He also stated that Uber will shut down about 40% of its Greenlightlocations as a response to the economic crunch resulting from the coronavirus.
Dara Khosrowshahi has decided to take the lead and agreed to waive his base salary for the remaining part of 2020. The company in a letter to staff wrote that “In connection with the foregoing (the effect of the pandemic on the company), the CEO Dara Khosrowshahi, after due consultation with the Board of Directors, has agreed to waive his base salary for the rest of the year ending December 31, 2020.” This decision reached was reduced into an agreement that came into effect on the 2nd of May, 2020.
Many might be quick to criticize this decision taken by Uberespecially at these times when everyone is being affected. There would be outcries considering that these people to be laid-off have families that depend on them for survival. This brings to question whether or not this is the right step to take by Uber and if this is the right time to take it.
The reality is that Uber rides trips volumes have reduced drastically in the past months. Total lockdown in major cities where Uber is fully functional means they have not been in operation. For the few places they have been operational, it has only been to convey people who offer essential services. When all of these factors are considered in line with the hiring freeze of Uber, you will discover that beyond not making profits, there is no work for recruiters.
Cutting operational expenses at this time is the best decision any company that looks to survive these trying times will make. No one has any idea when all this will be over and it is difficult for companies to live in the previous normal when a new normal seems to be emerging already.
The Executive of Uber made an estimated profit of about $1 million last year but seems to be far from hitting same this year talk more of surpassing it. With our fingers still crossed, we look forward to getting more details about this lay-off from Uber in the coming weeks.
