2025 has seen record layoffs. What does this mean for the labor market?

Welcome to 2025, where layoffs are rampant

Using various credible sources – including the Bureau of Labor Statistics, the US Office of Personnel Management, layoffs.fyi, and more – Forbes reported more than 250,000 layoffs in the first few months of 2025 alone. 

Where’s the damage happening? 

Finance and tech are being hit hard

According to layoffs.fyi, which tracks real-time data, the tech industry continues to experience significant workforce reductions, with more than 61,000 employees having been laid off by May 2025. 

This includes major companies like Microsoft, Google, and Amazon (which alone let go of 18,000 employees in 2025). Additionally, big banks like HSBC, UBS, and Commerzbank are also trimming their global headcount this year. 

Mass media meets mass layoffs

Major players in the private media sector are also cutting back. Disney has shed more than 5,500 employees, while Warner Bros. Discovery has laid off more than 2,000, and Paramount Global has trimmed at least 1,800 employees this year. 

Retail, hospitality, and leisure have taken a hit

While Walmart has seen over 7,000 layoffs in the US so far, even the UK retail industry is under pressure. One article predicts more than 17,000 store closures (up from 13,000 in 2024) and about 200,000 lost jobs in the industry. Meanwhile, the Financial Times suggested these layoffs will also affect hospitality, leisure, and transport. 

Manufacturing? Also fracturing

Volvo, Volkswagen, Stellantis, and other companies have announced major job cuts, while more than a third of German companies, mostly industrial businesses, will make cuts in 2025, according to Reuters. 

The public sector isn’t immune either…

Since the establishment of DOGE (The Department of Governmental Efficiency), there’ve been more than 35,000 government job cuts across multiple federal agencies in the US. 

Meanwhile, cuts run deep in the UK’s National Health Service (pun intended). Some reports indicate that one in three NHS trusts are reducing clinical positions, with each planning to cut up to 1,500 jobs, according to the Guardian. 

What’s driving record layoffs in 2025? 

Here are the root causes of these layoffs. 

1. Slowing growth and rising costs = corporate and governmental belt-tightening

Several countries are grappling with sluggish growth and escalating costs. In its latest survey, the Beige Book, the Federal Reserve found clear signs of a nationwide slowdown – with more than half its districts experiencing either no growth or a decline, and the rest growing slowly. 

Meanwhile, trade wars have been disruptive and caused widespread uncertainty. Inflation is expected to rise above the Federal Reserve’s 2% target, possibly even to 3% by the end of the year, according to MarketWatch. 

Trade disruptions and high inflationary pressures have increased the costs of operations, raw materials, and more for businesses. Higher costs of living have also reduced consumer spending overall. 

This means companies not only generate less revenue but also spend more to operate. So they cut costs immediately by reducing their biggest expense – employee salaries. They prioritize essential roles and eliminate less important or too-costly-to-maintain jobs.

The problem isn’t limited to the private sector. Slowdowns and disruptions have also led to government spending cuts and efficiency drives. DOGE, for instance, has sparked widespread public sector layoffs in the US. Similarly, the UK government’s push to shrink public budgets has resulted in significant layoffs in local councils, healthcare, and civil services. 

2. Post-COVID hiring corrections continue

During the COVID-19 pandemic, nearly the whole world was in lockdown, and people were essentially living, shopping, and working online. Tech giants hired aggressively to meet this surging demand. 

A CNN article used data from the US Securities and Exchange Commission filings to show that between 2019 and 2022, Amazon and Meta doubled in numbers, Snap increased its headcount by 96%, and Salesforce, Alphabet, and Twitter also increased their workforces by more than 60%. 

As demand dropped in a post-pandemic world, these companies were left with more employees than they needed, leading to major layoffs in tech, which have continued into 2025.  

One CNN report quoted Mark Zuckerberg, the CEO of Meta, who said:

"At the start of Covid, the world rapidly moved online, and the surge of e-commerce led to outsized revenue growth. Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended. I did too, so I made the decision to significantly increase our investments. Unfortunately, this did not play out the way I expected."

3. AI and automation are displacing jobs 

In 2025, AI and automation are no longer just buzzwords from the future – they’ve become everyday realities both inside and outside work. Tasks like scheduling, data entry, customer support, and more, which were once manual and human-led, are now being handled by AI. 

For example, Klarna, a Swedish fintech firm, replaced 700 customer service workers after adopting AI for the job. While this did negatively impact the quality of service and Klarna is now re-hiring to fill some gaps, it’s proof that change is here, and it’s led to job reductions across industries. 

4. Remote and hybrid work have shaken things up

The pandemic may have come and (somewhat) gone, but remote and hybrid work have stuck around. Companies that have embraced this have reduced physical office spaces and let go of office management, administrative support, on-site IT service, facilities managers, and more. 

The labor market is experiencing knock-on effects

This round of layoffs isn’t just leaving people jobless. It’s changing the labor market in ways like never before. Here’s how. 

1. Competition is fierce 

The Bureau of Labor Statistics’ (BLS) April 2025 report showed that US job openings fell to 7.2 million open roles – a 3% dip since March 2025. The total is at its lowest since September 2024, indicating a notable decline. 

On the flip side, the unemployment rate has spiked by 1.4 percent year over year, pushing many more job seekers into the market. 

Popular career site Handshake’s State of the Graduate Class of 2025 report showed that while job postings on the platform declined by 15% over the past year, the number of applications per job increased by 30%. The numbers speak for themselves  – job seekers are encountering a highly competitive and crowded market. 

2. Hiring freezes and slowdowns continue

Mass layoffs and uncertainty have put companies – and the government – in wait-and-watch mode so they don’t make mistakes like overhiring again. 

In January 2025, the US President signed an executive order mandating a hiring freeze across all executive departments and federal agencies. This prohibits filling open vacancies or creating new roles, and has even resulted in rescinded job offers. 

Similarly, many companies in the private sector have first laid off employees and then paused hiring altogether. JP Morgan, for example, has slowed hiring, and other Wall Street companies are grappling with hiring freezes, too. 

While some companies pause hiring altogether, others are using a cautious, slow approach by extending recruitment timelines. One report showed that hiring teams are conducting 42% more interviews now versus 2021, contributing to a 24% increase in average time-to-hire. 

3. Ghost jobs are on the rise

According to Fortune, eight in ten companies have recently admitted to posting ghost jobs: fake job listings that don’t correspond to any real role a company is hiring for. Employers claim doing this keeps talent interested and makes an impression about the company’s growth, enabling them to build their pipelines and attract candidates when they kickstart hiring again. 

4. Internal mobility is keeping things moving

Many employers will be betting that they can, at least, continue business as usual without hiring more people.

This seems to be the case. Rather than bringing in new talent, companies are focusing more on quiet hiring and promoting from within. Research by LinkedIn shows that internal mobility has increased by 30% since 2021 – and that 79% of learning and development leaders agree that reskilling existing workers is more cost-effective than hiring externally. 

The bad news: Job seekers are burned out and p*ss*d off

While layoffs carry less stigma than before (mostly because they’ve become so common), people are still affected by them. We asked Gerti Mema, Marketing Manager at Equipment Finance Canada, about how layoffs affect a company’s employees. 

"Layoffs don’t just hit the bottom line; they really shake up the culture of a company. Employees often feel the strain, and even the most efficient teams can lose momentum when people are unsure of their future," Gerti explained. 

And, it’s not just laid-off employees or their colleagues who are affected. 

According to Employ Inc’s latest Job Seeker Nation Report, 66% of candidates are experiencing burnout from the endless job searching and difficult market. Additionally, research by Clarify Capital showed that a third of Americans are experiencing layoff anxiety.  

Zac Rios, a YouTuber, spoke to job candidates to learn more about their frustrations with slow hiring, ghost jobs, and more in 2025. Here’s what some of them had to say: 

• "Next thing I know, I go check LinkedIn… and it’s my job they’ve posted. Nobody told me."

• "I've applied to 300-plus jobs since August, and I've heard back on none of them."

• "I went through four different interviews – actually five people – only at the very end to be told that I didn’t have the qualifications."

• "People [are] basically begging for a job now."

The good news: The labor market isn't "collapsing" – it's being redefined

My take on all this? The labor market is on the brink of total transformation, and it’s better for both employers and candidates to pave the way for change than to sit back and catastrophize. Let’s see what’s changing. 

Companies will kickstart hiring soon

Yes, 2025 has seen its fair share of layoffs. But it’s not all doom and gloom. The latest ManpowerGroup Employment Outlook Survey revealed that US employers are showing resilience despite economic uncertainties and are cautiously optimistic about their hiring intentions. 

Results indicated a Net Employment Outlook (NEO) of 34% for Q2, 2025 –  a strong indication that many employers plan to expand their workforce in the coming months. (NEO represents the percentage of employers planning to hire minus those expecting to reduce staff.)

I also dug deeper to see where hiring is expected to pick up most. 

Sectors like IT, finance, healthcare, and life sciences report strong hiring intentions. 

Mid-sized companies (those with 250 - 999 employees) are more ambitious in their hiring plans, while larger companies (with 5000+ employees) are relatively conservative, possibly because they’re finding it harder to recalibrate after rounds of layoffs or because they’re rethinking workforce strategy altogether. 

But they’re not hiring for the same roles – work itself is changing

According to a recent pulse survey by the Society of Human Resource Management’s (SHRM), half of HR professionals who conducted layoffs listed workforce reorganization as their reason, followed by 37% who said it was changes in business strategy. Companies aren’t downsizing per se –  they’re restructuring to align with the evolving nature of work itself. 

The World Economic Forum’s latest Future of Jobs Report 2025 highlights this shift, noting that while AI and automation may displace 83 million jobs over the next five years, around 69 million new jobs are expected to emerge in areas like data analysis, AI development, and cybersecurity. 

We’re already seeing evidence of this shift at a company level. IBM, for instance, has phased out hundreds of HR professionals and replaced them with AI tools capable of executing routine admin tasks. But these layoffs haven’t led to a net job loss. 

In fact, the CEO, Arvind Krishna, told the Wall Street Journal that IBM’s total employment has actually gone up. "What [AI] does is give you more investment to put into other areas." For IBM, this has meant more hiring in software development, sales and marketing, and other roles that demand complex problem-solving, customer-facing responsibilities, and critical thinking. 

Importantly, it’s not just tech that’s driving change. Consumer sentiment is evolving, too, and sustainability has also been a major area of focus for a growing number of companies. The WEF report also shows an increasing demand for jobs, such as renewable energy engineers, environmental engineers, and electric and autonomous vehicle specialists – all among the 15 fastest-growing jobs. 

"The surge in layoffs in 2025 is more than just a reflection of economic instability – it’s a recalibration of priorities. For HR professionals, this isn't merely about trimming headcount. It has become about repositioning organizational strategy toward resilience, automation, and a leaner, more data-informed talent structure." - Miriam Groom, CEO of Mindful Career.

Skills take center stage – for everyone

With a change in the very nature of work and jobs comes a shift in the skills employers are looking for today. According to the WEF, 39% of workers’ core skills are expected to change over the next five years. 

Until a decade ago, there were no traditional degrees for areas like AI, automation, big data, cybersecurity, and digital transformation. 

Employers hiring for these roles now are ditching degree requirements and focusing on which candidates have the right technical skills for these roles – a concept called skills-based hiring, which has gained momentum over the last few years. Our latest State of Skills-Based Hiring report shows that 81% of employers use skills-based hiring (up from 56% in 2022). 

The story doesn’t end with hard skills. The WEF also showed that employers are prioritizing soft skills like resilience, adaptability, and agility so they can hire employees who can swiftly adjust, upskill, and reskill in a world where uncertainty is the norm. 

Luckily, despite their frustrations with current market conditions, job seekers are proactively upskilling and reskilling. Online learning platforms like Udemy have seen higher enrollments, while a Coursera survey showed that 90% of students believe a micro-credential (a short, focused certification in a specific skill) will help them stand out in the recruitment process. 

People aren’t waiting for the old roles to return. They’re preparing for the future of work and skills.

Out with security, in with flexibility 

You’d think with so many layoffs in 2025, unemployment would be skyrocketing. However, the US unemployment rate has remained steady over the past year (this figure includes only adults actively seeking employment). 

While some candidates are taking a breather to upskill, others have stopped waiting for full-time roles to open up and are pivoting to freelancing, consulting, and gig work to maintain their income streams. 

Upwork’s The Future Workforce Index surveyed 3,000 skilled knowledge workers and found that 28% of them now operate as freelancers or independent professionals. Additionally, 36% of Gen Z candidates who currently hold full-time positions are also considering freelancing. 

This shift is also coming from employers. Faced with economic uncertainty and constant change, employers are hiring more freelancers, consultants, and part-time workers to pick up the load that used to belong to salaried employees. 

This approach reduces the costs associated with full-time team members while enabling companies to stay agile and increase or decrease their headcount as situations change. According to Robert Half’s most recent Demand for Skilled Talent report, 63% of US employers plan to boost their use of contract workers in their teams in the first half of 2025.

Reshaping for a successful future

Layoffs have swept across industries and countries in 2025, bringing with them a wave of anxiety, ghost jobs, slow hiring, and fierce competition. 

While the outlook feels grim, we’re actually in the middle of a full-blown transformation, which is changing how companies hire, the roles they need, and the kinds of work job seekers are taking on. 

Companies that lean into this change and focus on flexible staffing, invest in skills-first hiring, and put agility at the center of their culture will be thriving when the dust settles.