Unlike Swedish rival Ericsson, Nokia did not disclose how many employees it had in its quarterly financial statements. In the past year, this concealed Nokia’s total labor cost reduction of 500 million euros ($597 million) a year. However, in the latest annual report released by Nokia, it can be seen that nearly 5,000 jobs were reduced in 2019, and more than 6,000 jobs disappeared last year.
The report shows that Nokia’s net layoffs hit 11044, taking Nokia’s average number of employees in 2020 to 92,039. This means that Nokia’s total employees drop by 11% in just two years. A regional analysis shows that employment figures all over the world have declined, but China has experienced the largest decline. Last year, the number of employees in China fell by 12% to 13,749, a decrease of nearly 3,500 since 2018.
Nokia’s number of employees in the Americas has also decreased significantly, with a 9% reduction in 2020 and a reduction of more than 2,800 positions since 2018.
Nokia did not say anything about the massive layoff
Nokia did not mention spending cuts in the report. “In recent years, as we have adjusted our strategy in response to business goals and activities, our workforce has fluctuated”. This is the company’s only statement with respect to adjustment(s). It fails to mention any form of layoff.
The good news for investors is that Nokia’s operating profit margin has almost doubled to 4% in 2020, although sales have fallen by 6% to around 21.9 billion euros ($26.1 billion). Two years ago, Nokia had an operating loss of 59 million euros ($70 million). By 2020, it has achieved a profit of at least 885 million euros ($1.1 billion).
But this is not good enough for shareholders, especially when net losses are over 3 billion euros ($3.6 billion) in the past three years.
The most worrying thing is that Nokia’s last saving plan resulted in a substantial drop in research and development expenditures. After investing about 4.5 billion euros ($5.4 billion) in research and development in 2019, Nokia cut its budget by nearly 450 million euros ($540 million) last year. The investment in 2018 was nearly 4.8 billion euros ($5.7 billion). After making mistakes in the 5G market, shareholders are not entirely confident. They fear that the company may lose its competitiveness.
The company’s new CEO, Pekka Lundmark, promised to revive the mobile phone business no matter what the cost.
There are indications that under the leadership of Pekka Lundmark, the company will further cut expenses. He has reduced Nokia’s bloated global leadership team from 17 to 11. The restructuring plan means that 14,000 employees will be transferred from company functions to new business groups such as mobile, network infrastructure, cloud services, and licensing (Nokia technology).