Consumer executives expect layoffs in 2023 as labor shortage eases

The chronic labor shortage in the U.S. and European consumer-goods industry is likely over, according to a Deloitte survey.

More than half of executives polled by the consulting firm say that the labor shortages of recent years will end in six months – or have already resolved. Almost 70% of respondents said they won’t increase their rate of hiring and might even curb it. One in four plan layoffs, the survey found.

Companies across the spectrum struggled to find enough workers to fill a demand surge for their products early in the pandemic. But inflation has eroded shoppers’ ability to keep spending, sparking declines in sales for many firms. At the same time, the easing of pandemic restrictions has consumers spending once again on experiences such as travel and eating out.

Expectations of deteriorating economic conditions are also forcing companies to rethink their head count. Layoffs have already hit tech and finance, while McDonald’s also recently announced it would be cutting jobs.

Deloitte surveyed 150 U.S. and European executives in November in the food and beverage, household goods, personal-care and apparel industries. Most of the companies are multinationals, and each has more than $500 million in annual revenue.

While inflation appears to be easing, it remains a top concern, with 80% of executives saying their companies will raise prices again this year. Only 48%, however, say they can do so without affecting demand.

More than half of respondents said they’re shortening their supply chains – which often means shifting production away from Asia – to avoid the snags of recent years.