‘Uncertainty is the worst’: the impact of mass layoffs on who stays on the job

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“Every morning, before I get out of bed, a feeling of dread comes over me,” says technology professional Kara, from New York, in the United States.

She is 41 years old and has worked at her current company for four years, but says she “knows” that she will probably be fired.

“I’m almost 100% sure that one of these days I’m going to get the email saying my position has been terminated. It’s just a matter of time,” she says.

For Kara (her full name is omitted for professional reasons), the layoffs –mass layoffs– have already brought considerable impacts to her life, even if she has not yet lost her job.

She says she is anxious, sleeps little and cries a lot.

“Uncertainty is the worst,” according to Kara. “Part of me thinks I should just quit to preserve my nerves, but the exact same thing could happen elsewhere. Job security in this industry is basically non-existent.”

Layoffs swept the planet last year, especially in the last four months of 2022. Thousands of employees who thought they were relatively secure in their jobs lost their jobs.

In the technology area, for example, companies laid off more than 150,000 employees in 2022, according to the tracking website Layoffs.fyi. And, in 2023, they have already extinguished almost 76 thousand positions.

In finance, Goldman Sachs, Morgan Stanley and Citigroup eliminated thousands of jobs.

And many other sectors have also been hit by the cuts, which have extended to retail, communications, healthcare and pharmaceuticals.

Historically, mass layoffs have been part of the economy’s natural cycle of ebb and flow, but experts say this wave is notable for several reasons.

The first: its scale and scope, especially considering that the fundamentals of the economy are showing improvement.

During the global recession of the late 2000s, for example, hundreds of thousands of people lost their jobs, but as a direct consequence of a huge drop in asset values ​​around the world, which wiped out trillions of dollars from international stock exchanges for a long period and turned the living conditions of many people upside down.

But this is not the current case, even with the proliferation of layoffs and professional uncertainty.

In the United States, the 2008 financial crisis and the period after the recession saw a 10% spike in the unemployment rate.

Around 15 million people have registered as unemployed, due to a systemic and prolonged downturn in economic activity. But today, the unemployment rate in the United States is around 3.5%.

And, during the Eurozone crisis in 2011, unemployment in the European Union exceeded 11.5%, while the current rate is less than 6.5%.

A second reason current unemployment is unusual is the very atmosphere of the workplace.

During the pandemic, managers advocated an employee-centered leadership style, prioritizing people’s well-being and mental health, according to Anna Tavis, professor of human resource management at New York University in the United States.

“We were encouraged to bring our full personality to work,” she says.

As a result, many professionals feel a certain cognitive dissonance – both those laid off during the layoff, and others like Kara, who live in fear of being next on the list.

Tavis explains that during the pandemic they heard one thing and now they are experiencing something that runs counter to that narrative.

“This is causing leadership to lose its authenticity and understandably has consequences for employees’ trust in their superiors,” she says.

Experts warn that if waves of layoffs like the ones we’ve seen recently, or even the imminent possibility of such cuts, continue to be part of working life, organizational cultures could also deteriorate, causing a cruel ripple effect on all aspects, from the employee commitment and productivity to their physical and mental health.

And, what is worse, these conditions can reach the next generations.

The account in human terms

It is important to note that job cuts can have immediate effects on well-being.

Plenty of research shows that the layoff increases the risk of a range of health conditions.

One of the most comprehensive abstracts gathered over 300 studies on this subject. It demonstrates that unemployed people are more stressed, less satisfied with their lives, marriages and families, and more likely to report psychological problems than employed people.

Being unemployed also carries a much higher risk of suicide and higher overall death rates in the decades after being laid off.

Another survey, from 2009, concluded that, for employees without pre-existing health problems, the probability of developing health conditions increases by 83% in the first 15 to 18 months after the layoff and the most common conditions are stress-related illnesses , including hypertension, heart disease and arthritis.

But it is not just workers on leave who suffer in an economy dominated by the layoff.

Professionals like Kara know that even before any cuts are announced, the possibility and fear of being unemployed can also harm mental health and productivity.

In an article published in the Harvard Business Review, writer and executive coach Melody Wilding explains that uncertainty at work can undermine motivation and lead to mental health problems, such as anxiety and depression.

Mixed messages about prioritizing employee well-being are also troubling professionals, often with negative effects.

During the pandemic, employees have demonstrated changes in their professional priorities and ambitions – and, most importantly, they have started to invest more in their mental health.

In many cases, employers have acknowledged these requests for greater support. Many leaders opened conversations about creating policies, programs, and tools to help struggling employees.

Corporate dialogue was also opened to establish a future in which terms such as burnout, stress and depression would no longer be associated with weakness, nor would they carry the burden of stigmatization in the workplace.

For young people entering the workforce in recent years, the employee-focused company that purportedly champions mental health and well-being may be the only impression they ever get of the job market.

But this emphasis on personal well-being runs completely counter to the reality many professionals are facing right now.

Data show that the precariousness of the current job market is harming the well-being of professionals.

In a recent global survey of 35,000 workers, around 52% of respondents said they were concerned about the impact of economic uncertainties on their job security, while more than a third were openly concerned about the possible loss of their job.

Maureen Dollard, professor of organizational and work psychology at the University of South Australia, has conducted research that has shown that employees in psychologically unhealthy environments (she defines “psychologically healthy environments” as those in which emotional well-being is not ignored ) took 43% more sick days per month.

His research also demonstrated that stress can increase the risk of accidents at work.

Other specialists, such as Aaron Nurick, professor of management and psychology at Bentley University, in the United States, point out that layoffs can also have an impact on employees who do not lose their jobs, in what he describes as “survivor’s guilt” –e the feeling that “I can be next”.

Professor Anthony Klotz of the Faculty of Business at University College London agrees. For him, at least temporarily, “the layoffs make the work experience less pleasant for those who remain and it is not difficult to imagine that these negative effects are lasting in many cases”.

long term effects

Staff cuts not only harm the mental health of people in the workforce, they can also change employees’ behavior – even hindering their career development and, ultimately, their overall relationship with work.

Melody Wilding, for example, writes, “If you feel helpless in the face of upheaval in your company, you might pull back and rein in your efforts, making yourself a less likely candidate for cutbacks.”

Furthermore, Nurick writes that, in this environment, “[as pessoas] they can be more careful about what they say and do. Employees don’t want to be watched because it makes them more vulnerable. They are like wild animals – they will do whatever it takes to camouflage themselves and fit in. It’s a basic element of survival.”

Maureen Dollard’s research also demonstrates that these employees were significantly less productive at work.

Professional uncertainty can also generate behaviors such as “quiet quitting” – doing only the minimum necessary to stay in a job.

“Employees who were told during the pandemic that their companies were employee-centric and cared about their well-being simply don’t want to work for people they feel they can’t trust,” explains Anna Tavis. “They are angry.”

Creativity can also suffer from mass layoffs.

“The remaining employees are more careful and cautious, which means they don’t engage in behaviors that could bring innovation,” writes Nurick. “Nobody seems to want to fail.”

Anthony Klotz also points to research showing that laid-off employees are much more likely to voluntarily resign in the future, compared to those who have never experienced a layoff.

“One might think that the damaging effects of layoffs on the confidence of affected employees are limited to the company that laid them off,” he says.

“But this research indicates that going through a layoff also makes it harder to build strong ties with future employers.”

For professionals escaping the layoff but fearing they could be next, Klotz says a common reaction to feelings of career uncertainty is to start looking for another job.

“Loyalty comes from the reciprocal loyal treatment between companies and employees. Normally, the feeling of loyalty acts as a force that prevents employees from seriously dedicating themselves to job offers from outside”, he says.

“But when layoffs occur, the remaining employees are less likely to have a sense of loyalty, as the company has just demonstrated its willingness to unilaterally sever ties with even thousands of professionals.”

Klotz is known for having coined the phrase “The Great Resignation” in 2021 to define the trend that led to large numbers of American workers leaving their jobs during the Covid-19 pandemic.

Academics and other experts categorically say that for many of the laid-off employees — as well as many who remain after their companies make big cuts — these effects will be long-lasting.

And, what’s worse, the more frequently layoffs are adopted as an ostensible and necessary way to combat economic setbacks, the more normalized and ingrained they will become in business culture.

This leaves professionals in a deeply precarious position, as their fear of losing their jobs at any moment deepens.

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