Finance crisis claims 70 000 jobs in one day

Companies forecast almost 70 000 job cuts in a single day as the rampant crisis born in the banking sector struck workers in factories and offices across the globe and brought down a government on Monday.

The financial catastrophe claimed one of its biggest casualties yet as Iceland’s Prime Minister Geir Haarde announced the resignation of his government after months of protests over its handling of the economic crisis.

And shortly after United States President Barack Obama warned of a downturn that could become “dramatically worse”, several huge companies announced a fresh avalanche of cuts.

In New York, construction equipment giant Caterpillar said it planned 20 000 job cuts worldwide to cope with plunging sales and US telecom operator Sprint Nextel announced 8 000 cuts—14 percent of its staff.

Japan’s top 12 carmakers expect to cut a total of 25 000 jobs between now and the end of March to cope with an industry slump, a survey by Jiji Press concluded on Monday.

Dutch banking and insurance group ING announced 7 000 job cuts and a deal for the Dutch state to assume 80 percent of the risk on a €27,7-billion portfolio of troubled assets.

Dutch electronics giant Philips said it would eliminate 6 000 jobs.

Pfizer Inc, which on Monday announced that it would be buying rival drug maker Wyeth in a $68-billion deal, said it would slash more than 8 000 jobs as it prepares for an expected revenue crash when its cholesterol drug Lipitor loses patent protection in November 2011.

British Prime Minister Gordon Brown insisted that the crisis, which has forced his government to intervene to shore up banks, should give rise to “a new global order”.

“As some want, we could close our markets—for capital, financial services, trade and for labour—and therefore reduce the risks of globalisation,” he said, according to the text of a speech issued by his office.

“Or we could view the threats and challenges we face today as the difficult birth-pangs of a new global order—and our task now as nothing less than making the transition through a new internationalism to the benefits of an expanding global society.”

Nowhere is the transition likely to be more painful than in the labour market, as the slowdown forces struggling enterprises around the world to slash their payrolls.

The announcements by the two Dutch companies came ahead of confirmation that Europe’s second-biggest steelmaker, Indian-owned Corus, said it would cut more than 3 500 jobs around the world, most of them in Britain.

Workers arriving early on Monday were gloomy about their prospects.

“People feel gutted. I have already had to take a 10 percent pay cut,” said 45-year-old Douglas Mayhill, a worker at a Corus plant in Port Talbot, southern Wales.

“I was told on Friday I have a choice—either accept a 10 percent pay cut or take redundancy—that is no choice.”

The US Congress was meanwhile due to begin debate this week on Obama’s $825-billion stimulus Bill designed to haul the US economy out of a paralysing recession.

In his first presidential radio address at the weekend, Obama raised the spectre of double-digit unemployment and a massive erosion of family incomes if Congress did not act on the stimulus Bill.

“If we do not act boldly and swiftly, a bad situation could become dramatically worse,” he said.

European shares rallied on Monday, however, with sharp gains in the banking sector on positive news from British group Barclays, whose share price surged more than 75 percent on unexpectedly strong profit expectations, analysts said.

The deepening recession pushed the price of gold, seen as a safe haven in times of stress, up to $906 an ounce, the highest level for three and a half months.—Sapa-AFP


Client Media Releases

Property mogul honoured at NWU graduation
Intelligence is central to digital businesses
One of SA's biggest education providers has a new name: Meet PSG's Optimi
A million requests, a million problems solved
Don't judge a stock by share price alone