The next shoe to drop in the labor market: the insurance industry
Asset managers, brokers, investment bankers, analysts and insurers alike will see massive job cuts into 2009. From Bloomberg:
“The bloodletting in the financial- services industry will accelerate in coming months, with job cuts doubling to about 350,000 worldwide by mid-2009, said Brian Sullivan, chief executive officer of search firm CTPartners.Reductions on that scale would be equivalent to 20 percent of the global workforce at financial companies before the credit crisis began, said Sullivan, whose firm has worked with Citigroup Inc. and JPMorgan Chase & Co. Banks, brokerages and funds have eliminated about 170,000 positions worldwide.”
The Americas’ (the U.S.) financial industry has suffered the most compared to Europe and Asia, with already 0.9% job cuts in Q4, and according to Bloomberg, the worst it yet to come.
As of November 20, 2008, 95% of world financial job cuts occured at banks and brokerage houses. But insurers, with $US143 billion of the almost $US1 trillion in capital losses worldwide, are cutting jobs too. But if you work at AIG, your job is relatively safe. In spite of a record $US61 billion in losses, AIG has cut just 0.8% of its workforce.
Hartford Financial Services has tallied $US7 billion in losses to date – just 11% of AIG’s losses – and cut 500 jobs, or 1.6% of its workforce. That is just wrong. But furthermore – and I find this very hard to believe, but nevertheless that’s what Bloomberg says – Ambac Financial Group has cut zero jobs to date with an $US11 billion in accumulated losses.
The insurance business accounts for roughly 15% of world capital losses, but the job cuts have been minor compared to those at banks and brokerage houses. In aggregate, the insuarnce carriers, investments sector as reported by the BLS actually added 2,500 jobs in October. But that cant’ last for long.
The next “shoe to drop” in the financial bloodletting of jobs will likely be in the insurance industry.
Originally published at the News N Economics blog and reproduced here with the author’s permission.