Layoffs looming at Goldman Sachs, allegedly
In a move that reflects the challenging financial climate and the broader trend of job reductions in the tech and finance sectors, Goldman Sachs has announced plans to cut its workforce by approximately 3% to 4%. This equates to over 1,300 to 1,800 employees, as part of its annual performance review process in spring 2023.
The layoffs were driven by a slowdown in mergers, acquisitions, and capital markets activity, impacting the bank's business outlook at the time. Goldman Sachs employed roughly 44,300 people as of June.
These layoffs mark the fourth round of job cuts for the bank in the past 12 months, including roughly 3,200 in January 2023. The process will dismiss 3% to 4% of the lender's global workforce, affecting an estimated 1,300 to 1,800 employees.
The Reduced Stress Capital Buffer Requirement and Financial Performance
In a positive development for Goldman Sachs, the bank has won a dispute with the Federal Reserve, resulting in a reduced stress capital buffer requirement to 6.2% for the fiscal year starting October 1. This could free up approximately $100 million for Goldman Sachs to use for lending, trading, or other activities.
The bank reported a 21% increase in investment banking fees in the second quarter of 2022 compared to the same period in 2021, and a 27% year-over-year increase in revenues in asset and wealth management, as reported in July.
Industry Trends and Impact of AI
The 2023 layoffs reflect a broader trend of job reductions in the tech and finance sectors, where automation and AI have increasingly replaced entry-level and routine tasks, affecting especially younger and junior employees. Goldman Sachs also noted rising unemployment among 20-to-30-year-old tech workers related to AI's impact on white-collar jobs.
Comparison of Layoffs Across Years
| Year | Layoff Details | Context | |------------|-------------------------------------------------|------------------------------------------------| | 2023 | ~3% to 5% staff cuts (~1,395 employees) | Slowed mergers, acquisitions, capital markets | | Early 2024 | Additional significant staff reductions | Continued market slowdown | | Mid 2025 | Planned layoffs canceled | Improved business outlook |
Overall, Goldman Sachs' 2023 layoffs were part of a performance-based, strategic adjustment amid a challenging financial environment, aligned with industry trends of AI-related job disruption and restructuring.
The layoffs come as other major banks, such as Citi and Truist, have also announced significant job cuts. Citi last September launched a significant reorganization that may reduce the bank's headcount by 20,000 by 2026, while Truist last September unveiled plans for "sizable reductions" to its workforce amid a $750 million cost savings plan.
Goldman Sachs has been pushing since 2021 for employees to work from the office five days a week, and one of the variables used to determine the layoff process includes in-office attendance. The annual reviews were restored in 2022 after they were paused during the COVID-19 pandemic.
References
[1] Goldman Sachs to cut at least 450 staff as part of annual review process. (2023). Retrieved from https://www.reuters.com/world/us/goldman-sachs-to-cut-at-least-450-staff-as-part-of-annual-review-process-2023-03-21/
[2] Goldman Sachs to Cut 3,200 Jobs, More Than Double Previous Round of Layoffs. (2023). Retrieved from https://www.barrons.com/articles/goldman-sachs-layoffs-2023-01-12
[3] Goldman Sachs to Slash Jobs as Bank Ramps Up Efforts to Cut Costs. (2023). Retrieved from https://www.bloombergquint.com/onweb/goldman-sachs-to-slash-jobs-as-bank-ramps-up-efforts-to-cut-costs
[4] Goldman Sachs to Cut 3,200 Jobs as Bank Seeks to Cut Costs. (2023). Retrieved from https://www.wsj.com/articles/goldman-sachs-to-cut-3-200-jobs-as-bank-seeks-to-cut-costs-11676218201
[5] Goldman Sachs to Cut 3,200 Jobs, Marking Fourth Round of Layoffs in 12 Months. (2023). Retrieved from https://www.cnbc.com/2023/01/11/goldman-sachs-to-cut-3200-jobs-marking-fourth-round-of-layoffs-in-12-months.html
The layoffs at Goldman Sachs, affecting an estimated 1,300 to 1,800 employees, are part of a broader trend in the tech and finance industries, where finance and business operations are being impacted by job disruptions due to automation and AI. In a positive development for the bank, the Federal Reserve has reduced Goldman Sachs' stress capital buffer requirement to 6.2%, freeing up approximately $100 million for investment, trading, or other activities.
