New Horizons in Management series
Edited by Alexander-Stamatios G. Antoniou and Cary L. Cooper
Chapter 9: The psychology of unemployment: laying off people in a recession
Economic recessions have social and psychological consequences. Many people lose their jobs or are compelled to work part-time. Young people cannot find work. A sense of lethargy and despair pervades many communities and offices. In some countries people take to the streets: in others they seem quietly resigned to their fate. There have been numerous studies of the psychological distress that unemployment brings (Bjarnsasson and Sigurdardotter, 2003). Counsellors used to remind people that it was jobs, not people, who are made redundant. They used words like: ‘surplus to requirements’, ‘let go’, ‘early retirement’, and ‘right sizing’ which were all euphemisms for involuntary unemployment. Boom and bust come in cycles. There were many layoffs in Europe in the early 1980s and then again in the early 1990s. The road from ‘layoff’ to ‘getting a life’ seems to follow various stages. The first crucial issue is the perception of procedural fairness or justice when being laid-off. This question is essentially twofold: who is ‘prepared for the chop’ and how is the process handled? Sometimes, but not often, it is pretty obvious who first deserved the ‘yellow card’. It is easier for managers to close a whole department or a whole section. How reasonable, rational and fearful that is perceived to be, by hopefully a rational and reasonable workforce, is part of the question. Procedural and distributive justice issues are very important here.
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