[PARIS] Amazon.com’s decision earlier this year to axe 14,000 employees around the globe is reverberating at the company’s European headquarters in Luxembourg.
In the coming weeks, Amazon is expected to fire 370 people, or about 8.5 per cent of the 4,370 employees there. The terminations are the tiny nation’s largest in at least two decades and a speed bump in the mutually beneficial relationship between Amazon and Luxembourg.
The Grand Duchy – with a population of 680,000 and a territory smaller than Rhode Island – is known as a tax haven and financial centre with relatively high wages and low income taxes. Like many foreign companies, Amazon has benefited from favourable tax treatment and had steadily increased its presence there since 2003. Even after the layoffs, it will be Luxembourg’s fifth-largest employer.
Under the European Union’s labour laws, companies must negotiate terminations with employee representatives and sometimes the government. After two weeks of talks, the job cull was recently lowered from 470 personnel to 370. Most affected workers will be notified in February, according to Prash Chandrasekhar, a member of the Amazon employee delegation.
The redundancies are “adjustments that reflect business needs and local strategies,” Amazon said in a memo to staff on Dec 12. The termination package “goes well beyond industry benchmarks,” the company said. The Luxembourg Labor Minister’s office did not return a request for comment on the layoffs.
The firings are particularly challenging for foreign employees who moved to Luxembourg to work for Amazon. To continue living in the Duchy, fired personnel from India, the US, Australia, Egypt, Tunisia and elsewhere must find new jobs in three months.
“I am almost sure some employees will have to leave,” Chandrasekhar said in a interview. “It’s not easy to find a job in Luxembourg, for 370 people entering the job market at the same time.” For those hoping to work for a big tech company, there is no real alternative to Amazon, he added.
In October, Amazon said its global job cuts were designed to “reduce bureaucracy, removing layers and shifting resources to ensure we’re investing in our biggest bets,” including artificial intelligence. The company said more layoffs are coming in 2026 and expects to restrict hiring to key areas of growth.
One employee at the Luxembourg HQ who requested anonymity to avoid retaliation said they expected the cuts to fall heavily on software developers because tech companies are increasingly handing over coding tasks to AI. This person also said Amazon is trimming the workforce after going on a hiring binge during the pandemic-era e-commerce boom.
“These job cuts were avoidable,” said Isabel Scott, a spokesperson for the General Luxembourg Workers’ Organization (OGBL) union. “But this is how big tech operates. The government is at work to attract foreign talent, but we see that our social model favouring dialogue isn’t respected by these companies. They just import the US model of hire and fire.”
The last time a company cut so many jobs in the country was in 2006, when Japanese electronics maker TDK shut down a factory and laid off 344 employees, according to the OGBL.
The OGBL and other unions have pointed to the outsize tax benefits Luxembourg has granted to Amazon. Like other foreign corporations, Amazon has set up holding companies in Luxembourg, through which it funnels European operations. Using accounting rules deemed legal in 2023 by European courts, Amazon has routinely declared losses on its continental operations, thereby minimising its tax burden.
Last year, according to public records, the Luxembourg-based holding company Amazon EU Sarl reported 70.4 billion euros (S$106.7 billion) in EU e-commerce sales and almost the same amount of expenses, including employee costs – leaving the company with a tax on profit of just 180 million euros.
“We pay corporate tax in countries across Europe amounting to hundreds of millions of euros, and we operate in full compliance with local tax laws everywhere,” an Amazon spokesperson said. “Corporate tax is based on profits, not revenues, and last year our profits were low as we continued to invest heavily across Europe.”
Amazon hasn’t announced any change to its footprint in Luxembourg City’s modern Kirchberg district, where it leases several buildings and prominently displays its “Customer Obsession” mantra in neon.
Managers based there oversee everything from e-commerce and supply chains to software development and engineering for the company’s European operations. Amazon routinely dispatches US executives to Luxembourg to learn about the international business before bringing them back to Seattle headquarters for other roles.
In November, Luxembourg Prime Minister Luc Frieden met Amazon chief executive officer Andy Jassy in Seattle, stressing in a Linkedin post that the company remains a “vital partner” for Luxembourg.
“Luxembourg’s been an important home for Amazon and our 4,000+ teammates there,” Jassy replied in a comment under the post. “Appreciated the discussion and partnership.” BLOOMBERG
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