Alaska Communications Systems Group Inc. (NASDAQ:ALSK), a telecommunications company located in Anchorage, is planning to cut approximately 30 employees, or five percent of its work staff.
There has yet to be an announcement of when these job cuts will take place or which divisions will be impacted. The company appears to be taking a wait and see approach in hopes that a number of employees will choose to leave voluntarily. Employees that do agree to do so will receive a separation package.
According to Heather Cavaaugh, the company’s director of external affairs, Alaska Communications is also ready to engage in, “other steps to reduce the number of employees [it has] to let go.” This may include laying off employees who would have preferred to stay.
Reasons Why Alaska Communications is Reducing Their Workforce
One of the reasons for Alaska Communications cutting jobs is the reduced funding coming from state and federal governments. Since employees wages are the largest cost of operating the business, a reduction in the number of employees will help boost efficiency.
The economic situation in the state is also a factor. For example, the wage growth in Alaska for the second quarter was -2.1% compared to the same quarter the prior year. This is compared to 8.3% wage growth for the entire U.S. or a differential of 10.4%.
The unemployment rate in the state of Alaska is 7.2%, compared to the national average of 4.1%. These economic figures are important to note because they impact the business’ customers as well; more individuals in the state unemployed means fewer who can afford the company’s services.
The funding and the poor performance of the economy are reflected in Alaska Communications’ annual declining revenue. In 2012, reported revenue for the entire year was $367.8 million, compared to annual revenue of $226.8 million in 2016. The job cuts can be attributed in part to this.
How Will the Job Cuts Take Place?
Since the economic environment of Alaska is worse than the United States as a whole, employees may not choose to leave on their own terms. The reasoning for this is it is a tough environment and finding a new employment opportunity may be a very difficult task to complete. Employees do not want to put themselves in a bad situation if they have a choice.
Consider that the only group of employees that would likely consider leaving on their own terms are those close to retirement. Due to the severance package given to those who volunteer to depart, older staff may choose to use to accelerate the retirement process.
If there are not enough employees voluntarily leaving Alaska Communications, then it is most likely that the company will start handing out pink slips. And this may be done sooner rather than later in order to keep employee morale as high as possible.
“Alaska Communications set to lay off 5 percent of its workforce,” KTUU, December 3,2017.
“10 Possible Reasons Unemployment Insurance Claims are Low,” Alaska Economic Trends, December 2017.
“Alaska Communications Systems Group Inc.,” MarketWatch, last accessed December 12,2017.