We inquired the moral hazard of large lay-offs of employees in order to keep companies alive
18 August, 2014
author: Camille Janssens & Maartje van Rijswijk
Although it is unpleasant for the employees of the company, firing them is sometimes critical. Staying on the same path will most likely create an even greater financial disorder and ultimately lead to even more people being laid off. It also lets people re-educate themselves, allowing them to find work in a different industry that might have more job opportunities. This will balance out the unemployment rates between sectors. Every economic cycle has its ups and downs, and the free market ensures that eventually it always evens back out, regaining low unemployment rates and plenty of job opportunities. Sometimes people need to be laid off in order for the free market to do its job.
Ronald van Eupen
If the future of the company is in jeopardy, I think it is justified companies fire employees. A company would never do so if not absolutely necessary. It would only fire employees if there is no other way to cut costs. Firing a majority of employees is then the most effective and quickest solution. I do, however, understand that many unions will go against such actions. To compete in the twenty-first century in times of crisis means increasing productivity per worker and decreasing costs. Staying in the game can only be achieved by reorganization and cutting the number of employees. Employees need to develop and specialize themselves in areas that they will personally succeed in and are necessary for the company to put itself in a better position for the future.
Communications and Information Studies
I understand that if a company goes bankrupt no one will have a job, but maybe there is a better solution to the problem like asking employees to give up part of their pay. Another option is decreasing the number of working hours. Every employee could give up four hours and if six people do this this, a part-time position will open up or the company will have decreased their payroll costs. However, in practice, the employees are not willing to participate in such actions. Therefore another option is early retirement. The continued existence of the company is of concern for all employees, and if there’s no other option than to let people go, then I find it justified.
Mercede van de Wiel
Communication and Information Studies
This unfortunate trend is a matter of choosing between two evils, which also very similar. Logically, a layoff has major consequences for the individual. We know effects of unemployment include depression, stress and loss of self-confidence. Less known, but not less uncommon, research has shown that unemployment may also lead to increased aggression, child abuse and suicide numbers. These risks are definitely not okay and laying off employees should always be considered very carefully. The national and even international economy is better off when companies remain. However, more benefits have to be provided and it leads to a drop in purchasing power of the population. A difficult choice to make, but given that employees still lose their jobs in bankruptcy, I believe that the massive layoffs of today are almost necessary.