Technology Layoffs: What Is The Hidden Harm Of Industry Redundancy On Employee Anxiety?

Job cuts have immediate negative effects on employee well-being and productivity writes Deveshi Malhotra.


While Google declared its intention to reduce its workforce by 12,000 employees, Meta and Amazon too began a fresh round of job cuts, making it the largest workforce reduction in the past 28 years. Layoff anxiety is the fear and uncertainty experienced by employees about their employment and financial stability that has emerged from the onset of the ‘Great Layoffs’ after decline in the pandemic’s Great Resignation.

Why has 2023 become the year of mass layoffs among Technological giants?

Despite the rapid growth seen by the Tech industry during the COVID-19 period, the negative consequences of the ruptured economy have come as an aftermath of the Pandemic. During this, companies’ hiring cost escalated during their ‘war for talent’ as they hired employees at massive scales. Not only did this harm the organizations’ financially and heighten unemployment rates but the sector layoffs also created an unwanted morale crisis and anxiety issues among existing employees. These employees experience decreased motivation and lower levels of engagement, often becoming victim to ‘survivor’s guilt’, i.e., the feeling of having done something wrong by surviving a traumatic event, when others around them did not.

Job cuts have immediate negative effects on employee well-being and productivity. A survey conducted by BizReport suggested that 52% respondents who avoided losing their jobs during the redundancy process experienced guilt on realizing that they had job security as compared to their counterparts who did not. Moreover, 65% layoff survivors reported being overworked to outperform their remaining colleagues and to fulfill the work their laid off-counterparts would earlier perform. Therefore, as highlighted in the Harvard Business Review, job insecurity can erode motivation and lead to extreme risk of mental health illness. Hence, the lack of ‘psychological safety’ raises concerns and has led to the emergence of The Employee Stress Cycle that incorporates stressors which leads to associated thoughts and emotions and later, a harmful psychological or physiological response. Layoff anxiety can become a self-fulfilling prophecy and while uncertainty is mostly linked to negative emotions, it can pose as a great motivator for employees to remain dedicated and be productive in such situations.

Another reason for layoffs in the tech industry is the upcoming role of Artificial Intelligence. For instance, Microsoft let go off approximately 10,000 employees and simultaneously invested $10 Billion in Open AI, a pioneer in the AI space. Therefore, according to the Journal of Human Resource Management, upskilling must be a priority for employees to keep abreast with recent AI developments as it is the next major wave of computing, which has led to the chain reaction of job redundancies.

Overall, while layoff anxiety is a lasting consequence of economic precariousness, it is imperative for organizations to embrace transparency and create an open dialogue with the employees, encourage their work-life balance, as well as invest in employee wellness, to minimize the layoff anxiety in present organizational staff.

( Deveshi Malhotra is  studying B.Sc. Social Science at UCL, London ) 

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