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Amazon to hire 10,000 new staff within the UK


A recent Bloomberg report states that Amazon plan on hiring 10,000 new workers once the UK comes out of the national lockdown.


Amazon’s announcement comes after their other recent claims proclaiming the firms plans of hiring 75,000 workers as part of its extensive North American logistics network.


The announcements come at a curious time as consumer tastes and fashions seem to be moving away from online retail back to physical stores with footfall levels increasing and sales within physical stores rising.


This means that Amazon’s decision conflicts with the way consumers are spending currently, has the billion-dollar business made a mistake?


The truth is Amazon has been performing extremely well recently with the firms Q1 earnings surging by 44%, smashing expectations.


However, this rise in earnings is likely due to the fact that major economies such as the UK were still in lockdown in the early months of 2021, but now that the economy is opening up with the lifting of lockdown restrictions Amazon’s earnings may start to decrease.


So does hiring more worker make sense? Surely it will lead to increased labour costs, however, due to Amazon’s size, the firm likely has X-inefficiency.


This is likely a direct result of Amazons monopsony over the labour market, especially regarding low skilled work. Amazon provides quite high wages for low skilled work, compared to other businesses with Amazons starting wage beginning at £9.70, a nice step up from the £8.91 living wage. For this reason, they attract much more candidates, and, the candidates are likely to be higher skilled


Additionally, due to Amazon’s size, it may be argued that they have somewhat of a monopoly over the online retail market, consequently, Amazon has no incentives to decrease production costs. Even though hiring workers lose revenue if online retail sales decrease in the coming months, Amazon does not care, it is not their main priority, the business makes shed loads of money.


The UK hiring process will bring Amazons total labour force within the UK to 55,000 by the end of 2021 with 1.3 million worldwide.


So, Amazon’s goal with expanding its workforce may not be to increase revenue per se, or at least that may not be the firm’s main goal, the likely objective is related to Amazon’s product portfolio.


Due to Amazon’s deep pockets, which is mainly attributed to their current monopoly status, the firm is not only able to enter markets with very high barriers for entry, but can also displace competition and change the entire dynamics of a said market if they wish.


So, Amazon’s main goal currently may not be to generate as much revenue as possible or to minimise costs, but instead, the firm is pushing innovation and product/service development to its highest limits.


Such projects include Amazon’s staffless stores, an even clearer example of Amazons power to enter markets with high barriers for entry is Bezos’ Blue Origin program, a rival to SpaceX.


These areas where Amazon is trying to branch into requires extreme talent due to the high levels of innovation and expertise which is required in said industry, as a result, Amazon reports that some of the 10,000 jobs are in ventures such as A.I, engineering, and other software development endeavours.


Although Amazon’s decision is a perfect example of how massive firms with monopoly power can abuse their status by not needing to control costs, Amazon is at least doing good by pushing innovation towards industries with a future.


The firm’s announcement of hiring new workers will undoubtedly benefit the UK labour market in the long run by providing both highly and low skilled work opportunities to UK families, additionally, firms who see Amazon setting up in Britain may soon follow to capitalise on our unions highly skilled workforce increasing FDI and potentially leading to stable and sustainable economic growth as new capital is creating within the economy through gross investment and organic expansion.

 

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Written by Hubert Kucharski

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