Intel has announced that it will be cutting the salaries of its employees and the latest move is likely to avoid layoffs. In the last six months, we have witnessed mass layoffs across the tech industry. Most of the major tech companies have laid off employees to cut costs and Apple is currently the only major firm that has so far managed to avoid layoffs. The company did cut the 40 per cent salary of CEO Tim Cook to reportedly avoid taking harsh steps to reduce the workforce. Intel now seems to be going in the same direction, but the employees at all levels will be impacted by this.
Intel told Bloomberg that the tech company plans to 25 per cent base salary of CEO Pat Gelsinger and his executive leadership team will see a reduction of 15 per cent in their salaries. The senior managers will see a 10 per cent reduction in salary, and the mid-level managers who get compensation will take 5 per cent.
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While Intel’s move could be disheartening for many, this could be taken to avoid mass layoffs. Several companies have announced layoffs to cut costs, and Intel has taken a different approach to avoid cutting thousands of jobs. The company told Bloomberg that the chip maker is preparing for the economic downturn and preserving cash for future plans. There is no information on whether the pay cut will remain in effect until the end of 2023 or end in a few months.
The company has also reportedly reduced its 401(k) matching program from 5 per cent to 2.5 per cent. Intel has also put a halt to merit raises and quarterly performance bonuses, the person familiar with the matter said.
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“As we continue to navigate macroeconomic headwinds and work to reduce costs across the company, we’ve made several adjustments to our 2023 employee compensation and rewards programs,” Intel said in a statement. “These changes are designed to impact our executive population more significantly and will help support the investments and overall workforce needed to accelerate our transformation and achieve our long-term strategy.”
The move to save costs is not surprising considering the company reported lower profit margins as the PC market is witnessing slow growth and a dip in sales. The competition is also now pretty stiff and Intel has also reportedly lost some market share to its rivals such as AMD, which is something Intel’s CEO indicated to Reuters.
As mentioned above, Intel isn’t the only tech company which is planning to reduce the pay of the employees. Apple, which is one of the few tech companies in the world to avoid mass layoffs, also trimmed down the pay, but it was limited to the company’s CEO – Tim Cook. The executive reportedly accepted to take more than 40 per cent pay cut in 2023.
