Microsoft has recently announced that it will freeze pay for all full-time employees this year. The decision was made in response to the current macroeconomic climate and as a means of navigating uncertainty.
In an internal memo, CEO Satya Nadella explained that the pay freeze was necessary in order to generate enough yield to invest in the major platform shift towards artificial intelligence. He noted that Microsoft had already raised compensation in 2022.
While full-time workers will not see a pay increase this year, Nadella stated that the company would consider raising rates for hourly workers. Additionally, Microsoft will maintain its bonus and stock award program without overfunding it.
A company spokesman stated that navigating a dynamic economic environment and a major platform shift requires critical decisions about investing in their people. The pay freeze is one such decision that Microsoft has made in order to invest in its future.
“As a company we recognise that navigating both a dynamic economic environment and a major platform shift requires us to make critical decisions in how we invest in our people,” a company spokesman said.
Technology companies around the world have reduced their workforce and cut costs in response to weak consumer demand and to strengthen their financial position in anticipation of a possible economic downturn. This year, Microsoft began laying off thousands of employees, following in the footsteps of other tech giants such as Meta Platforms and Amazon.com. Despite these cuts, Microsoft reported quarterly earnings and revenue that exceeded expectations last month. The company is making significant investments in artificial intelligence, including a reported US$10 billion investment in OpenAI and the development of a Bing internet search chatbot. This strategy is aimed at boosting future sales of Azure cloud services, search advertisements, and office productivity software.
“As a senior leadership team, we don’t take this decision lightly, having considered it over several months,” Nadella said in his memo. “This year the economic conditions are very different across many dimensions, including customer demand, the labour market and the investments required for the next cycle of innovation.” — Chien-Hua Wan and Julie Chien, with Vlad Savov, (c) 2023 Bloomberg LP
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