How Amazon’s 8.5% layoff in Luxembourg raises difficult questions for Indian foreign workers
When Amazon announced 14,000 outages worldwide earlier this week, some of them were blamed on its technology unit in Luxembourg. Bloomberg reported that the retail giant laid off 8.5 percent, or 370, of its 4,370 employees in the small European country; This is the largest figure in nearly 20 years.
However, as an added effect, layoffs could create an impossible situation where Indian and other foreign workers would also be included in these cuts.
Impossible situation for Indian and other foreign workers
The Duchy of Luxembourg has American, Australian, Egyptian, Indian and Tunisian employees working at Amazon. If any of these staff are among those laid off, they will have to look for another job or return home within three months.
Speaking to Bloomberg, Amazon employee delegation member Prash Chandrasekhar said that some employees may have to leave the country.
“I am almost certain that some employees will have to leave. It is not easy to find a job in Luxembourg, where 370 people enter the job market at the same time,” he said. Chandrasekhar noted that there is no real alternative to Amazon, especially for job seekers in big tech.
In particular, to lay off employees in the European Union (EU), companies must negotiate with employee representatives and sometimes the government. Bloomberg added that after two weeks of such discussions, Amazon reduced the number of layoffs in Luxembourg from 470 to 370.
Some affected employees will be notified of their dismissal in February, Chandrasekhar told the agency.
Is there tension in the relations between Amazon and tax haven Luxembourg?
The terminations are the tiny country’s largest in at least two decades and a boost to mutually beneficial relations between Amazon and Luxembourg.
With a population of 680,000 and a territory smaller than Rhode Island, the Grand Duchy is known as a tax haven and financial center with relatively high wages and low income taxes. Like many foreign companies, Amazon has benefited from favorable tax treatment and has steadily increased its presence there since 2003. Even after the layoffs, Amazon will be Luxembourg’s fifth-largest employer.
Under the European Union’s labor laws, companies are required to negotiate layoffs with employee representatives and sometimes the government. After two weeks of negotiations, the number of layoffs was recently reduced from 470 staff to 370. According to Amazon employee panel member Prash Chandrasekhar, most affected employees will be notified in February.
Amazon said in a Dec. 12 memo to staff that the layoffs were “adjustments that reflect business needs and local strategies.” The company said the termination package “far exceeds industry benchmarks.” The office of the Luxembourg Minister of Labor did not respond to a request for comment on the layoffs.
In October, Amazon said the global layoffs were designed to “reduce bureaucracy, remove layers, and shift resources to enable us to invest in our biggest investments,” including artificial intelligence. The company said it expects more layoffs to come in 2026 and to limit hiring to key areas of growth.
An employee at Luxembourg Headquarters, who asked to remain anonymous to avoid retaliation, said they expect cuts to fall mainly on software developers as technology companies increasingly delegate coding tasks to artificial intelligence. The person also said Amazon cut its workforce after going on a hiring spree during the pandemic-era e-commerce boom.
“These layoffs could have been avoided,” said Isabel Scott, spokeswoman for the General Luxembourg Labor Organization (OGBL) union. “But that’s how technology works. The government is working to attract foreign talent, but we see that our social model of dialogue is not respected by these companies. They are simply importing the US model of hiring and firing.”
According to OGBL, the last time a company in the country laid off this many people was in 2006, when Japanese electronics manufacturer TDK closed a factory and laid off 344 employees.
OGBL and other unions pointed out the huge tax advantages Luxembourg provides to Amazon. Like other foreign companies, Amazon has established holding companies in Luxembourg, through which it directs its European operations. Amazon has minimized its tax burden by routinely declaring losses across its operations on the continent, using accounting rules deemed legal by European courts in 2023.
Last year, according to public records, 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; This resulted in the company receiving only €180 million in taxes on profits.
“We pay hundreds of millions of euros in corporate taxes in countries across Europe and operate in full compliance with local tax laws everywhere,” an Amazon spokesperson said. “Corporate tax is based on profits, not income, and our profits were low last year as we continued to invest heavily across Europe.”
Amazon has not announced any changes to its footprint in Luxembourg City’s hip Kirchberg district; where he rents several buildings and prominently displays his “Customer Obsession” mantra in neon.
Executives here oversee everything from e-commerce and supply chains to software development and engineering for the company’s European operations. Amazon routinely sends its U.S. executives to Luxembourg to learn about international business before bringing them back to its Seattle headquarters for other assignments.
In November, Luxembourg Prime Minister Luc Frieden met with Amazon Chief Executive Andy Jassy in Seattle and emphasized in a post on Linkedin that the company remains a “vital partner” for Luxembourg.
“Luxembourg has been an important home for Amazon and our 4,000 teammates there,” Jassy replied in a comment under the post. “I appreciated the discussion and partnership.”
(With input from Bloomberg)
