‘Amazon’s labour cost to rise to $4000 bn in Q4’: Morgan Stanley

This rise in the labour cost stands by 60 per cent

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This year, Amazon plans to hire more than 1,50,000 employees and the Company also bumped up the wages of the workers, where some employees are receiving $18 per hour and at some locations this wage stands at $22.50 per hour. Also, at certain locations the Company has offered a sign-on bonus of $3000. Morgan Stanley estimates that Amazon’s logistics workforce will increase to 7,00,000 from 5,00,000 this year. This will definitely affect profit margins.

The rising cost of labour at Amazon has prompted the bank to lower the growth projection for 2021 for the e-commerce giant by 16 per cent, to $5.6 billion. For 2022, the growth projection has been reduced by 19 per cent, to $9.5 billion.

New hires are expected to increase the efficiency of Amazon ahead of the festive season, but the rising labour cost in the Company is likely to eat away some of its profits. Seeing this, Morgan Stanley has cut the price target of Amazon stocks from $4,300 to $4,100.

As per the Bureau of Labour Statistics in the US, 6,78,000 people have left the retail industry. To win back the employees, organisations will have to fulfil other needs of people including flexible schedules, more paid and sick leaves and better treatment from customers who refuse to follow the mask policies of the store, and so on. After all, retention of employees is not just about money.

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