Question

Downsizing can take a toll on society, especially when a large percentage of a firm’s employees are terminated. Should government restrictions be placed on downsizing? Why or why not?

Answer 1

Downsizing means mass termination of employees by the company. This usually occurs when companies are not not able to recover there costs and are leading towards massive losses. This massive termination however creates a havoc in the employee's life as most of the employees are dependent on their jobs to fulfill their basic necessities. Also, if most of the companies are doing downsizing it can lead to depression in the economy. Also, consumption expenditure falls leading to low demand of products. Thus companies are also impacted. This can take toll on the economy as a whole.

So, there must be government restrictions regarding such massive layoffs. Some of the restrictions can be:-

The company should give atleast 30 days prior notice to the employees it wishes to terminate.

Also, there must be laws to protect the interests of the terminated employees. They must be given proper termination money. Also, it must be noted that the company is not terminating the employees on discrimination basis. Discrimination can be on the basis of age, religion, gender, nationality, etc.