Recently, the Bank of Nova Scotia has announced that it would close some braches and cut 15,000 jobs in order to reduce its cost. This action will have a direct effect on unemployment inside and outside the Canada and lead to a fall of Scotiabank’s stock. The following below are my personal thought:
After doing research, I found that the main reason causes the mass layoff is the overall growth pressure for banking industry. More specifically, the financial crisis has hurt Canadian banks with operations in the Caribbean as well as the South America. However, this huge decision will cause a series of social problems. Almost two third of the employees will lose their jobs; thus, the crime rate may increase due to high unemployment rate. More importantly, other Canadian banks will probably follow Scotiabank’s action and reduce the number of positions in the near future, so the impacts on gross domestic product and the country’s economy will be hard to imagine.
Canadian banking industry is trying to reduce its workers in order to reduce the overall cost so that the profits can be increased. From my perspective, these banks should not experience a fast growth just by continued firing people; this action will definitely increase the pressure to citizens as well as government. As a leading company in banking industry, the bank of Scotia needs to pay full responsibility to society, including both of its employees and customers. It is undeniable that making profit is the main purpose of a company, but sustainability is also important in order to survive in long term.
Reference: http://www.reuters.com/article/2014/11/04/bank-nova-restructuring-idUSL4N0SU5C920141104