When Amazon announced 14,000 cuts globally earlier this week, a number of these were from its tech unit in Luxembourg. Bloomberg reported that the retail giant is culling 8.5% or 370 of its 4,370 employees in the tiny European nation, its largest such job cuts here in around 20 years.
The Amazon layoffs could also pose an impossible situation for Indian and other foreign workers in Luxembourg, who are likely to be among those affected.
The redundancies are “adjustments that reflect business needs and local strategies,” Amazon said in a memo to staff on 12 December, adding that the severance package “goes well beyond industry benchmarks”. The Luxembourg Labor Minister’s office didn’t return a request for comment on the layoffs.
The Duchy of Luxembourg has employees from the United States, Australia, Egypt, India, and Tunisia working at Amazon. If any of these staff are among those fired, they will have to find another job within three months or return home.
Speaking to Bloomberg, Prash Chandrasekhar, a member of the Amazon employee delegation, said some employees may have to leave the country.
“I am almost sure some employees will have to leave. It’s not easy to find a job in Luxembourg, for 370 people entering the job market at the same time,” he said. Chandrasekhar added that for those seeking work in big tech in particular, there is no real alternative to Amazon.
Notably, to fire employees in the European Union (EU), companies must hold negotiations with employee representatives and sometimes the government. After two weeks of such discussions, Amazon reduced its job cuts in Luxembourg from 470 to 370, Bloomberg added.
Amazon will notify a number of the affected employees of their termination in February, Chandrasekhar said.
The report added that Amazon’s layoffs in the 680,000-population country could trigger some “speed bumps” in the so far mutually beneficial relationship between the tech giant and tax haven nation.
Luxembourg is known as a tax haven and financial centre with relatively high wages and low-income taxes, which have benefited many foreign companies. Amazon has since 2003 steadily expanded in the country and even after the layoffs will be Luxembourg’s fifth-largest employer.
An employee told Bloomberg anonymously that most of the cuts are expected to be among software developers as artificial intelligence (AI) use grows, and to “trim” the workforce hired during the pandemic-era boom.
The General Luxembourg Workers’ Organization (OGBL) union and other unions allege that Amazon has been granted “outsized” tax benefits in Luxembourg.
The BB report said that Amazon and other foreign companies have set up holding companies in Luxembourg, through which they funnel European operations. It added that Amazon uses accounting rules deemed legal by European courts in 2023 to routinely declare losses on its continental operations and minimise tax burden.
Last year, according to public records, the Luxembourg-based holding company Amazon EU Sarl reported €70.4 billion ($82.8 billion) in EU e-commerce sales and almost the same amount of expenses, including employee costs, leaving the company with a tax on profit of just €180 million.
In November, Luxembourg Prime Minister Luc Frieden met Amazon CEO Andy Jassy in Seattle, and later stressed in a LinkedIn post that the company remains a “vital partner” for Luxembourg.
In a comment under the post, Jassy replied, “Luxembourg’s been an important home for Amazon and our 4,000 teammates there. Appreciated the discussion and partnership.”
(With inputs from Bloomberg)