Europe job woes spread as Ericsson, ING, Commerzbank cut
By Simon Johnson and Patrick Lannin | November 8, 2012 12:35 AM EST
Companies as diverse as telecoms equipment group Ericsson, bank ING and steel group Kloeckner announced big job cuts on Wednesday as an economic slowdown and uncertainty spread across some of Europe's strongest economies.
Even companies in Nordic states such as Sweden, widely seen as a safe haven from Europe's debt woes, have been forced to adjust in the face of falling demand.
The euro zone has been the focus of the crisis in Europe and automakers and financial groups have already announced big cutbacks. A faltering U.S. recovery has also overshadowed prospects for business and underlined the problems facing a re-elected President Barack Obama.
Euro zone unemployment rose to new record highs in September, with 18.49 million people without work, up by 146,000 from the month before, according to Eurostat.
In the financial sector, Swiss giant UBS already plans to cut 10,000 jobs, and German newspaper Die Zeit reported on Wednesday that Commerzbank
The largest Dutch financial group, ING
"Operating conditions were persistently challenging during the third quarter due to weak economic fundamentals, the low interest rate environment and financial market volatility," ING said.
Elsewhere, German steel distributor Kloeckner & Co
The news came as figures showed German industrial output fell by a worse than expected 1.8 percent in September and government advisers said the economy would grow by just 0.8 percent this year and next amid the euro zone gloom.
The announcement by Ericsson of the loss of 1,550 of its 17,786 staff in Sweden showed that the problems of the euro zone are spreading and affecting the biggest Nordic economy, which had previously outperformed other countries in Europe.
The blue-chip firm, with 109,200 staff in more than 180 countries, said the cuts were inevitable after third quarter core profit fell 42 percent due to slower orders and a shift in business mix to less profitable contracts.
"Export industries are having a really tough time and it is clear they are being hit by the global weakness," said chief analyst Torbjorn Isaksson at Stockholm-based bank Nordea.
"We expect to see (Swedish) unemployment above 8 percent quite soon, in the winter we could see it somewhere around 8.5 percent due to falling employment and also high labour supply," he said. In September, the jobless rate was 7.4 percent.
The Swedish central bank has cut rates twice this year and at its last meeting, when it held borrowing costs at 1.25 percent, it said a rate cut this winter was more likely than a hike.
In the euro zone, the European Central Bank is expected to leave interest rates unchanged on Thursday, even after a raft of weak economic data.
(Reporting by Simon Johnson; Editing by Patrick Lannin, Alistair Scrutton and Giles Elgood)
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