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Brunt of U.S. job cuts have telecom hook

One-third of all U.S. job cuts announced in the first six months of the year came from technology companies, led by the hard-hit telecommunications industry, a report says.

One-third of all U.S. job cuts announced in the first six months of the year came from technology companies, led by the hard-hit telecommunications industry, according to a report released on Monday.

Fully one-quarter of jobs eliminated were in the market for communications equipment and services, as the industry struggles to dig out from under a glut of capacity left over from the late 1990s boom, executive placement firm Challenger, Gray & Christmas said in a report.

While last year may have been bad for job losses in the U.S. telecommunications industry, this year is looking just as bad or even worse, the report said. Most stock market analysts see little chance of a rebound in telecommunications before 2004.

"High-tech job cuts are likely to continue rising for the balance of the year with no turnaround for telecom in sight," said John Challenger, chief executive of the Chicago-based company, in a release.

Technology companies have cut 243,200 of the 735,527 total jobs lost in all industries since January. Although the number of tech job cuts is down 23 percent from last year, technology's share of the total is nearly on track with last year's pace, when technology companies slashed more than 1 in 3 of the nearly 2 million total jobs done away with in 2001.

Telecommunications companies, which have announced 165,840 layoffs this year, are set to match or exceed the 317,777 jobs the industry lost in 2001, the report said. Telecom job losses are the most significant percentage any industry has taken of the total since Challenger started tracking job cuts in 1993.

WorldCom's move last month to cut 17,000 jobs, or about one-quarter of its work force, has further darkened the outlook. The No. 2 U.S. long-distance telephone and data services company has been accused of violating securities laws by covering up $1.22 billion in losses by improperly booking $3.85 billion in expenses.

Though telecom job cuts are on the rise, jobs at other tech-related industries have declined from a year ago, the report said.

The computer industry saw its announced cuts in the first six months almost 26 percent below last year, although it did see "a dramatic surge" in the second quarter as 42,186 cuts were announced, up from 13,212 in the first quarter.

On a bright note, fewer than 2,000 job cuts were announced in the e-commerce category through the first half of 2002, compared with almost 50,000 in the same period last year, Challenger said.

Electronics manufacturers saw their announced job cuts decline to slightly more than 20,000 in the first half from more than 59,000 last year.

The U.S. high-tech industry employed a total of 5.6 million U.S. workers in 2001, according to a recently published report by the American Electronics Association, an industry trade group.

The heavy job losses in telecommunications have hit certain states disproportionately, especially Texas, which lost 3,000 net jobs of its 459,000 tech-related jobs in 2001, the AEA said. The Telecom Corridor in Richardson, Texas, a suburb of Dallas, had grown up to become the center of telecom equipment manufacturing in the United States.

California, the largest high-tech employer, with 998,000 jobs in 2001, saw its growth slow to just one percentage point over 2000, down from a 13 percent rise between 1999 and 2000.

Story Copyright © 2002 Reuters Limited. All rights reserved.