Europe job woes spread as Ericsson, ING, Commerzbank cut
STOCKHOLM (Reuters) - Companies as diverse as telecoms equipment group Ericsson, bank ING, steel group Kloeckner and engineering firm Bombardier announced sweeping job cuts on Wednesday as economic worries spread across some of Europe's strongest economies.
Even previously safe haven Nordic states like Sweden have had to adjust to lower demand. World number one mobile telecom network equipment maker Ericsson (ERICb.ST) said it was cutting 9 percent of staff there.
Germany's second-biggest lender, Commerzbank (CBKG.DE), was reported by newspaper Die Zeit to be set to cut 5,000-6,000 jobs and Dutch financial group ING (ING.AS) said it aimed to lose more than 2,000 jobs worldwide.
That would add to the 10,000 jobs in the financial sector which Swiss giant UBS plans to cut.
European Central Bank President Mario Draghi said on Wednesday that investors were returning to the euro zone, but the European Commission forecast barely any growth in the single currency area next year.
"Make no mistake about it, this is an across-the-board economic downturn that's sparing no country in the EU," said Nicholas Spiro, director of Spiro Sovereign Strategy consultants in London.
The U.S. recovery has also been faltering, overshadowing prospects for business and underlining the problems facing a re-elected President Barack Obama.
Others lining up to announce job cuts on Wednesday were wind turbine maker Vestas in Denmark, to lose 3,000 staff, garden equipment maker Husqvarna of Sweden, cutting 600, and German steel distributor Kloeckner & Co (KCOGn.DE), where losses will be equivalent to 16 percent of its workforce.
Canada's Bombardier Inc said it would cut about 1,200 jobs worldwide, including at a plant in Aachen, Germany.
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.
In the 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.
U.S. companies have also focussed their cost cutting in Europe. Dow Chemical plans to cut 2,400 positions, Ford Motor Co is firing thousands in Belgium and diaper and tissue maker Kimberley-Clark aims to leave low-profit businesses in Europe.
Ericsson's loss of 1,550 of its 17,786 staff in Sweden showed 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.
Still, such levels of joblessness are better than in the crisis-hit countries of the euro zone.
In Greece, at the centre of the sovereign debt crisis, the jobless rate is 25 percent. In Sweden, the government has leeway to spend more on its already generous welfare programmes if it wants, while austerity is in full swing in Athens.
But unemployment is one of the biggest issues among Swedish voters and a revitalised opposition is making grounds in polls in part due to fears of further job losses.
The Swedish central bank has cut rates twice this year and at its last meeting, when it held at 1.25 percent, it held out the prospect of a rate cut in December.
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.
($1 = 6.6978 Swedish crowns)
- Tweet this
- Share this
- Digg this
- Ukraine forces kill up to five rebels, Russia starts drill near border |
- Jodie Foster marries girlfriend Alexandra Hedison
- Boy and girl on Korean ferry drowned with life jackets tied together |
- Barclays chairman defends staff bonuses as Standard Life leads shareholder protests
- Australia rules out link between debris and Malaysian plane