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Lay-Off Crisis in the Post-Pandemic Society

The COVID-19 pandemic has caused a significant impact on the global economy, resulting in the layoff crisis in various sectors. The study focuses on understanding the magnitude of the layoff crisis in different sectors and regions, examining the factors driving these layoffs, and discussing the possible solutions to tackle the crisis at hand.

The post-COVID layoff crisis is a complex issue that has had a severe impact on the economy and the job market. The informal sector, small and medium enterprises, and urban workers have been hit particularly hard, and the slow pace of economic recovery has prolonged the crisis.

The research identifies various factors contributing to the layoff crisis, such as the decrease in demand, supply chain disruptions, and changes in consumer behaviour. The study concludes by suggesting the need for comprehensive policies and interventions to address the layoff crisis and mitigate its effects on the labour market in post-COVID society. Overall, this research provides valuable insights into the challenges facing workers in the post-COVID society and underscores the urgent need for action to address the layoff crisis.

Every one in four Indians is distressed due to the looming layoff crisis in the nation, while three out of four are concerned about rising inflation in 2023, according to a survey by marketing data and analytics firm Kantar[1]. Though the Covid pandemic has largely been overcome, its effects are still troubling society. Among these, some of the most prominent after-effects can be seen in the global and domestic economies.

The global economy has been dealing with the aftershocks that the covid-19 left and the same has been visible in the historic layoff crisis. The recent trend of unprecedented amounts of the workforce being stripped of their livelihood is not one to be overlooked and it has to be understood well to be able to form a plan to deal with the upheaval. The situation of the workforce which has been laid off from their respective fields due to a multitude of reasons has made society realise the fragility and vulnerability of the human situation when faced with inexorable natural disorders.

A sudden slowdown in manufacturing and services demands post the Covid-19 added to uncertain macroeconomic conditions has triggered mass layoffs across major firms all around the globe. In January 2023, India's most valuable startup, Byju's laid off 1000 employees in a single week[2]. This trend can be seen all across the board as major tech firms and startups have taken up to sacking scores for their employees in attempts to secure profit margins in the uncertain post-pandemic economy.

After developing an understanding of the concept of layoffs and their implication in the post-pandemic economy and a brief discussion on the current trends relating to layoffs in the global economy, this essay will examine how this global trend can be tackled and a safer and more secure economy be developed.

What is layoff?

A layoff is a temporary or permanent separation of an employee from their job due to factors such as organizational restructuring, budget cuts, or economic downturns. Layoffs are typically carried out by employers as a means of reducing the workforce and cutting costs.

According to the Bureau of Labor Statistics, in December 2021, the US experienced 1.8 million layoffs and discharges, with the largest number of layoffs occurring in the leisure and hospitality industry. Additionally, during the COVID-19 pandemic, many companies were forced to lay off employees due to reduced business activity and revenue.

Layoffs can have significant impacts on both employees and the broader economy. For employees, layoffs can lead to financial instability, stress, and reduced job prospects. For the economy, layoffs can result in reduced consumer spending and increased unemployment rates.

Employers typically follow certain legal requirements and guidelines when carrying out layoffs, such as providing notice to affected employees and following anti-discrimination laws. However, the specifics of these requirements can vary depending on the jurisdiction and industry.

In summary, layoffs are a common tool used by employers to manage their workforce and cut costs and can have significant impacts on both individuals and the broader economy.

The Crisis
There is no doubt that the COVID-19 pandemic has been the most severe public health crisis in modern history, wherein death tolls reached approximately seven million individuals in a span of fewer than two years[3]. According to ILOs 'Asia�Pacific Employment and Social Outlook', it is estimated, the economic backlash of the COVID-19 pandemic wiped out some 81 million jobs in 2020 in Asia-Pacific markets alone. Additionally, the value of international trade in goods and services plummeted by 9.6% in nominal dollar terms in 2020, while the global GDP declined by 3.3%, marking the steepest decline since World War II.

The COVID-19 pandemic has had a significant impact on the global economy, with many businesses facing financial difficulties as a result of the crisis. While the severity of the impact has varied across industries and regions, some areas have experienced significant layoff crises in the post-COVID economy.

Post-covid layoffs have hugely affected the globe, same can be understood by:

  1. The International Labour Organization (ILO):
    The ILO is a specialized agency of the United Nations that deals with labour issues. In its report "COVID-19 and the World of Work," the ILO noted that the pandemic has resulted in "unprecedented levels of unemployment and underemployment" and that "many workers have lost their jobs or have had their working hours significantly reduced."[4]
  2. The World Economic Forum (WEF):
    The WEF is a non-profit organization that focuses on improving the state of the world. In its report "The Future of Jobs 2020," the WEF noted that the COVID-19 pandemic has accelerated the trend toward job displacement, particularly in industries such as travel, tourism, and hospitality.[5]
  3. The Pew Research Center:
    The Pew Research Center is a nonpartisan think tank that conducts research on a variety of topics. In a survey conducted in June 2020, the centre found that 44% of U.S. adults reported that they or someone in their household had lost their job or taken a pay cut due to the COVID-19 outbreak. [6]
  4. The International Monetary Fund (IMF):
    The IMF is an organization that promotes international financial stability and provides economic advice and assistance to its member countries. In its report "World Economic Outlook - October 2021," the IMF noted that the COVID-19 pandemic has resulted in "unprecedented global output losses" and that "employment has also been hit hard, particularly in low-income countries."[7]
As per estimated by Forbes India, 44 startups, including the ones with a unicorn status (startups valued at one billion dollars or more) have laid off nearly 16,000 of their employees amid the post-pandemic recession, these startups include the likes of Chargebee, Cars24, LEAD, Byju's, Ola, Meesho, MPL, Innovaccer, Udaan, Unacademy and Vedantu[8].

One of the root causes of the current layoff crisis has been cited as the looming recession, although it is difficult to predict with certainty whether or not there will be an economic recession in the near future. However, some experts and economists have expressed concerns about the possibility of a recession due to a variety of factors, including rising inflation, supply chain disruptions, and geopolitical tensions.

Some of the possible reasons for anticipating an economic recession are:

  1. The Federal Reserve: The Federal Reserve is the central bank of the United States and plays a key role in managing the economy. In its most recent report on the economy, the Federal Reserve noted that "the risks to the economic outlook remain" and highlighted concerns about rising inflation and supply chain disruptions.[9]
  2. The International Monetary Fund (IMF): The IMF is an organization that promotes international financial stability and provides economic advice and assistance to its member countries. In its most recent World Economic Outlook report, the IMF warned of "heightened downside risks" to the global economy and noted that the recovery from the COVID-19 pandemic has been "uneven and incomplete."[10]
  3. Economists and Financial Analysts: Many economists and financial analysts have expressed concerns about the possibility of an economic recession in the near future. For example, a survey of economists conducted by the National Association for Business Economics found that nearly half of the respondents believed there was a significant risk of a recession in 2022 or 2023.[11]

If an economic recession were to occur, it is possible that it could lead to layoffs as businesses look to cut costs and reduce their workforce. However, the extent and impact of any layoffs would depend on a variety of factors, including the severity and duration of the recession, the industry and sector in question, and the response of governments and policymakers.

In the US the current layoff came as inflations hit a 40-year-high in 2022, the Federal Reserve raised interest rates five times in efforts to slow the economy and rein in surging inflation.[12]

In an interview with CNBC's "Squawk Box" in December 2022, JP Morgan CEO Jamie Dimon warned inflation will "erode consumer spending power" and that a recession could begin by the middle of 2023.[13]

Layoff Crisis in India

The COVID-19 pandemic has had a significant impact on the Indian economy, leading to widespread job losses and layoffs.

Some key points to explain the post-COVID layoff crisis in India are:

  1. Impact on Small and Medium Enterprises (SMEs):
    The COVID-19 pandemic has had a severe impact on small and medium enterprises (SMEs) in India, leading to job losses and business closures. According to a survey by the All-India Manufacturers Organization (AIMO), around 35% of SMEs in India have shut down or are on the verge of closure due to the pandemic, leading to significant job losses.[14]
  2. Impact on Informal Sector Workers:
    The informal sector in India has been hit hard by the pandemic, leading to job losses and income insecurity for millions of workers. According to a report by the International Labour Organization (ILO), around 400 million workers in the informal sector in India are at risk of falling deeper into poverty due to the pandemic.[15]
  3. Impact on Urban Workers:
    The COVID-19 pandemic has had a significant impact on urban workers in India, particularly those in the service and hospitality sectors. According to a report by the Centre for Monitoring Indian Economy (CMIE), around 21 million salaried jobs were lost in India between April and August 2020, with the service sector being the worst affected.[16]
  4. Slow Economic Recovery:
    The Indian economy is slowly recovering from the impact of the pandemic, but the pace of recovery has been slow, leading to continued job losses and layoffs. According to a report by the Centre for Monitoring Indian Economy (CMIE), the unemployment rate in India stood at 6.9% in December 2021, indicating that the job market is still struggling to recover from the impact of the pandemic.[17]
Overall, the post-COVID layoff crisis in India is a complex issue that has had a severe impact on the economy and the job market. The informal sector, small and medium enterprises, and urban workers have been hit particularly hard, and the slow pace of economic recovery has prolonged the crisis.

The global Situation
The current layoff spree in the global context is a complex issue, with multiple factors contributing to it.

Here are four key reasons for the current wave of layoffs:

  1. Economic Impact of COVID-19 Pandemic:
    The COVID-19 pandemic has had a severe impact on the global economy, leading to job losses and business closures. The pandemic has disrupted supply chains, reduced demand for goods and services, and forced many businesses to operate with reduced capacity. According to the International Labour Organization (ILO), the pandemic caused a global decline of 114 million jobs in 2020.[18]
  2. Automation and Technological Advancements:
    Automation and technological advancements have been reducing the need for human labour in various industries. Many companies are adopting automation and artificial intelligence to reduce labour costs and increase efficiency. According to a report by the World Economic Forum, automation and digital transformation will lead to the displacement of 85 million jobs by 2025.[19]
  3. Business Restructuring and Reorganization:
    Companies are increasingly restructuring their businesses to stay competitive and adapt to changing market conditions. Restructuring often involves layoffs, as companies aim to reduce costs and streamline operations. According to a report by Challenger, Gray & Christmas, a US-based outplacement and executive coaching firm, US companies announced 2.3 million job cuts in 2020, the highest since 2009.[20]
  4. Political and Regulatory Changes:
    Changes in political and regulatory environments can also lead to job losses. For example, changes in government policies, such as tax reforms, trade tariffs, and immigration regulations, can impact businesses and result in layoffs. The Brexit process in the UK, for instance, has led to the relocation of several businesses and the loss of jobs.[21]

Overall, the current layoff spree is a complex issue with multiple contributing factors. The COVID-19 pandemic, automation, business restructuring, and political and regulatory changes are some of the key reasons for the current wave of job losses.

Further, we can understand the problem more practically by looking at the cases of some companies tacked the post-covid economic era and how it affected the employees of the said companies.

On January 20 Google announced that it will be slacking off up to 12,000 of its employees, i.e., about 6% of its global workforce. The CEO Sundar Pichai's notification regarding this mass layoff was posed on Alphabet's corporate blog, he wrote: "Over the past two years we've seen periods of dramatic growth. To match and fuel that growth, we hired for a different economic reality than the one we face today". Further while commenting on the current economic situation, he stated "These are important moments to sharpen our focus, re-engineer our cost base, and direct our talent and capital to our highest priorities".[22]

It is also important to look at the situation at the online messaging platform Zoom, wherein its CEO Eric Yuan unveiled plans to slash about 15% of the workforce citing reasons that as "the world transitions to life post-pandemic" and the "uncertainty of the global economy" calls for steps so that the company can weather the economic environment.[23]

A similar trend is seen across all major players in multiple sectors where chunks of the workforce are being slacked citing the reasons for facing the changing landscape in the post-pandemic economy. In the case of Dell Technologies, its PC-making unit Dell has cut approximately 6,650 employees citing uncertain market conditions as the company is facing a crash in demand after a pandemic high.[24]

The trend of laying off employees for the reasons of cost-cutting can be even seen in the Chinese economy where the parent company of TikTok, the China-based ByteDance laid off hundreds of its employees working in Douyin, the Chinese version of TikTok which boasts 600 million daily users.[25]

In the US alone it is estimated that nearly 125,000 employees lost their jobs in 2022 as major IT companies, manufacturers and banks resorted to massive rounds of layoffs after recession fears began to surge in June.

On the internet front, this crisis can be seen on the business and employment-focused social media sites, LinkedIn which is presently flooded with job postings, support offers for friends and colleagues who have been laid off, and tips for overcoming professional obstacles as many businesses reduce their workforces in order to survive the uncertain macroeconomic situation. According to market research firm Sensor Tower, the LinkedIn app was downloaded an estimated 58.4 million times in 2022 globally across Google Play Store and Apple App Stores-up 10 per cent from 2021.[26]

The Root Cause
In late 2022, soon after Elon Musk took over as the largest shareholder in Twitter, roughly 50 per cent of the workforce of the company was slacking off. Jack Dorsey, co-founder of Twitter and its CEO until last year, offered contrition "I grew the company size too quickly. I apologize for that" through a tweet.

In such a case we can understand one of the causes of the layoff crisis is the surge of employment rates in telecom industries during the Covid period, such a sudden increase in company size is taxing on the revenue generated and in the post-covid period which saw in decline in demand of IT services resulted in this increased workforce to become a liability for the company, and as such the way to secure profits was to layoff chuck of the workforce.

To understand the cause behind the current layoff crisis it is important to look at the case of Meta, wherein on November 9, 2022, the CEO Mark Zuckerberg shared the news about the layoff of about 13 per cent of the company's global workforce, i.e., 11,000 employees. The grounds for this action were stated to be "cost-cutting changes".

He further stated that the start of Covid saw a surge in e-commerce which resulted in outsized growth in revenue. Mark acknowledged that he wrongly predicted this to be a permeant change and so significantly increased the company's investment in resources which also included mass hiring. He stated that post-covid, digital commerce has not only resumed its previous patterns, but the revenue has also been substantially lower than anticipated due to the macroeconomic slump, increasing competition, and loss of advertising signal. He concluded by stating that in this new economic environment, the company needs to be more capital efficient.[27] Further meta has also extended its hiring freeze through Q1.

It can be concluded that the current layoff trend can be associated with a blooming services sector during the Covid-19 pandemic and during the recovery, the market saw a downward trend. The decline in demand caused companies to implement various cost-cutting measures to secure profits for the investors, and a major chunk of these cost-cutting measures in cutting the workforce.

However, it can be understood that global economic slowdown and a potential resurgence in COVID-19 are key areas of distress for economies worldwide.

Addressing the current layoff spree is a complex issue that requires a comprehensive approach. To tackle the layoff problem and support the affected workers a single solution cannot be trusted rather one needs to understand the problem from its root cause up to its effects to come up with an appropriate set of solutions.

Some potential strategies that could be implemented to tackle the problem are:

  1. Job Retention Schemes:
    Several countries, including the United Kingdom, Germany, and Australia, have introduced job retention schemes to support employers in retaining their employees. These schemes provide financial support to employers to cover a portion of their wage bill, thereby reducing the need for layoffs. For instance, in the UK, the Coronavirus Job Retention Scheme provided grants to cover up to 80% of employees' salaries up to a certain amount, and it has been extended multiple times since its initial implementation in March 2020.[28]
  2. Training and Upskilling:
    In addition to job retention schemes, many countries have also implemented training and upskilling programs to help workers reskill and prepare for new employment opportunities. For example, the Australian government has launched a $1 billion JobTrainer program to provide free or low-cost training in areas with job opportunities.[29]
  3. Support for Small Businesses:
    Small businesses have been particularly hard hit by the pandemic and may be more likely to lay off workers. To support these businesses and their employees, several governments have introduced measures such as grants, loans, and tax relief. For example, the US government's Paycheck Protection Program provided forgivable loans to small businesses to cover payroll costs and prevent layoffs.[30]
  4. Social Safety Nets:
    In many countries, social safety nets such as unemployment benefits and cash transfers have been expanded or introduced to support workers who have lost their jobs due to the pandemic.

    For instance, in Brazil, the government introduced a temporary emergency cash transfer program for informal workers and other vulnerable groups.[31]
    Overall, these measures aim to support workers and prevent layoffs or at least mitigate their impact. While the effectiveness of these measures may vary depending on the context, they demonstrate the importance of government and stakeholder action in responding to the challenges posed by the pandemic.

From the above-stated measure, one can infer that serious initiatives need to be taken by the government or other competent body in order to tackle the layoff crisis, all regions and industries have been affected differently by the pandemic and thus individualised and specific action needs to be taken. Further, it is also important to conclude that layoffs have affected both employees as well as employers, therefore policies need to be drafted that take into consideration the position of both parties.

In conclusion, the COVID-19 pandemic has had a significant impact on the global economy, and this has resulted in a wave of layoffs across various sectors. The post-COVID economy presents an uncertain and challenging time for many individuals, especially those who have been affected by job loss.

The findings of this research paper highlight the need for policymakers to develop and implement programs that can support affected individuals, and help them navigate the job market during these challenging times. It is also essential for organizations to prioritize communication with employees, and to provide them with the necessary support and resources to manage their transitions.

Finally, more research is needed to understand the long-term effects of layoffs in the post-COVID economy and to develop strategies to mitigate their negative impacts. Overall, this study provides important insights into the impact of the COVID-19 pandemic on the labour market and highlights the need for collaborative efforts to address the challenges faced by affected individuals in the post-COVID economy.

Moving forward, policymakers, business leaders, and employees must work together to create a more resilient economy that is better equipped to weather future crises. This may involve greater investment in training and upskilling programs to support workers who have lost their jobs, as well as increased support for small businesses and entrepreneurs. Ultimately, the goal should be to create a more equitable and sustainable economy that benefits all members of society.

  1. Available at
  2. Available at
  4. International Labour Organization. "COVID-19 and the World of Work." (2020).
  5. World Economic Forum. "The Future of Jobs 2020." (2020).
  6. Pew Research Center. "About Half of Lower-Income Americans Report Household Job or Wage Loss Due to COVID-19." (2020).
  7. International Monetary Fund. "World Economic Outlook - October 2021." (2021).
  9. Federal Reserve. "Beige Book - November 2021." (2021).
  10. International Monetary Fund. "World Economic Outlook - October 2021." (2021).
  11. Wall Street Journal. "Nearly Half of Economists Surveyed See Significant Risk of Recession." (2021).
  14. Business Today. "COVID-19 impact: 35% of Indian SMEs shut down, reveals survey." (2021).
  15. International Labour Organization. "COVID-19 and the world of work: Impact and policy responses." (2020).
  16. Times of India. "India lost 21 million salaried jobs between April and August: CMIE." (2020).
  17. Livemint. "Unemployment rate falls to 6.9% in December, still above pre-Covid level." (2022).
  18. International Labour Organization. "ILO Monitor: COVID-19 and the World of Work. Sixth edition." (2021).
  19. World Economic Forum. "The Future of Jobs Report 2020." (2020).
  20. Challenger, Gray & Christmas. "2020 Job Cuts Report." (2021).
  21. BBC News. "Brexit: Firms warn of 'sheer bureaucracy' and long delays at borders." (2021).
  23. [
  29. Australian Government. (2020). JobTrainer.
  30. US Small Business Administration. (2021). Paycheck Protection Program.
  31. World Bank. (2020). Social Protection and Jobs Responses to COVID-19: A Real-Time Review of Country Measures.
Written By: Ayush Singh Dahiya

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