Disney, no one is safe!
There is no denying that layoffs are a terrifying but common occurrence for many people. In fact, this concept has been part of the business world for decades. We’ve seen it during the Great Depression in the 1930s, we’ve seen it during the 2008 Financial Crisis, and we’re seeing it now after the effects of the 2020 COVID-19 Pandemic. But it makes sense! After all, we’ve experienced times when the global economy has been affected. It’s no surprise many companies were forced to cut jobs.
But in reality, layoffs have far-reaching consequences that affect entire communities, and it only worsens the economy as a whole. So, why is this concept becoming a trend so far? Layoffs were always present in our job environments even before the 2008 financial crisis or the Great Depression in the 1930s. But nowadays, it seems that this word hits the news way too often!
The layoffs trend has become a brutal reality for far too many people as we navigate the ever-changing economic landscape.
That’s right! The economy has a substantial impact on the frequency and magnitude of the layoffs trend. As we previously mentioned, when the economy suffers a downturn, companies often resort to mass layoffs. This is not only because they need to cut costs but also because there is no need for those people anymore since there is no demand.
Look at the hospitality industry during the 2020 COVID-19 Pandemic. Since we all had to stay in our houses, quarantined and isolated, everything closed down to stop the spread of the virus. But this had a devastating impact on hotels, restaurants, and all the other businesses that rely on tourism. Unfortunately, because of the situation, many of these companies have been forced to lay off employees or even close their doors permanently.
In fact, the Marriott chain cut off 17% of its corporate jobs in 2020, with Arne Sorenson, the CEO of the hotel chain, even declaring that even his salary would be cut to $0.
"In terms of our business, COVID-19 is like nothing we’ve ever seen before. COVID-19 is having a more severe and sudden financial impact on our business than 9/11 and the 2009 financial crisis combined. The worst quarter we had in those earlier crises saw a roughly 25% decline in hotel revenues, on average, across the globe.” Sorenson stated.
He even added that “For a company that’s 92 years old, that’s borne witness to the Great Depression, World War II, and many other economic and global crises, that’s saying something.”
It’s not just economic downturns that influence the employers’ decision to make massive layoffs. It’s also automation that has been proven to be a clear factor contributing to this trend.
Let’s face it – in the last decades, technological advancements have taken all of us by surprise. And its impact on the job market cannot be overlooked. With the introduction of artificial intelligence (AI), machine learning (ML), robotics, and other technologies, employers can replace manual labor with machines that can perform the same tasks as humans but with greater efficiency and lower costs.
Indeed automation has been proven to be extremely beneficial. But unfortunately, it also led to job displacement. There have been multiple cases where automation led to entire industries becoming obsolete, with many employees losing their jobs. For example, with the rise of online shopping, there was a decline in brick-and-mortar retail stores, which ultimately resulted in a significant loss of jobs in the retail sector.
And guess what? Automation is not limited to just jobs related to physical labor. Even white-collar jobs are being automated. In fact, AI algorithms can now perform jobs such as data analysis, customer service, and even legal research. So, more and more industries are at risk! As a consequence, these developments only perpetuated the trend of employers laying off their workforce.
But when companies are unable to automate certain jobs, or they simply choose not to, they may resort to outsourcing them. And that’s where globalization comes in!
The increased possibilities of countries cooperating with each other have opened up many opportunities both as an employee and also as an employer. For this reason, with the rise of globalization, as companies, we are now able to easily shift operations to other countries. However, in most cases, businesses are looking at outsourcing jobs in countries where the labor is much cheaper. Thankfully, this means that we can now save a significant amount of money by working with employees that ask for a substantially lower salary than a local employee.
And the best example is the manufacturing industry! Over the past few decades, many companies have moved their manufacturing processes from developing countries like the United States to developing or even underdeveloped countries like India or Bangladesh.
Let’s face it – we hear every time about a scandal where companies are caught exploiting their workers for lower wages. H&M and Zara are just some of the brands that have been widely accused of using sweatshops and unethical labor practices in their manufacturing processes. But most of the time, we’re all turning a blind eye because it has helped boost the economies of these countries by providing jobs and opportunities for growth.
In reality, however, this has resulted in a massive layoff trend and the loss of jobs for many people in developed countries. And frankly speaking, there is always going to be a demand for such jobs as well, regardless of the economic circumstances. But because of, the scarce availability, the trend led to higher unemployment rates and lower economic growth in certain regions.
While economic and technological issues play a significant role in layoffs, organizational factors are also a part of this grim reality.
Indeed – most of the time, we can blame the state of society and technological advancements. But layoffs can also occur due to reorganization and restructuring. Companies may choose to simplify operations, reduce employees, or modify the business’s focus. Workers may lose their jobs and have to adjust to new positions, or they may lose their livelihoods entirely.
This was the case with Microsoft in 2014, where they experienced the largest number of layoffs in the company’s history, cutting off 18.000 positions. Can you imagine? 18.000 people were left without a job from just one company. That’s almost the entire population of South Lake Tahoe in California!
As if that’s not enough, employees might also suffer due to the result of downsizing. Companies may opt to downsize for a variety of reasons, ranging from diminishing income to market shifts. For employees, this might mean losing their job, benefits, and sense of security. Nobody wants that! But unfortunately, it is a reality.
Workers and their families are significantly affected by restructuring and layoffs. Job loss is more than a financial crisis - it may also result in a loss of identity and purpose. The uncertainty and stress of looking for new work can harm one’s mental and emotional well-being. It’s critical to remember that behind every layoff is an actual individual with real challenges and concerns.
Employees, remember! Layoffs are not the consequence of personal failure but rather of bigger forces at work. It is not your fault! If you find yourself in this position, remember to try and navigate this difficult period with optimism and tenacity. Seek assistance from family and friends if you feel like it!
