Why are layoffs happening? Here’s what you can do to hire the right talent in IR 4.0.

Layoffs and recession

There is a strong correlation between the recession and layoffs. To understand why layoffs happen in the first place, we need to have a basic understanding of how the economy works and what leads to layoffs.

Recessions are brought about by a huge number of elements, with higher financing costs typically referred to as the essential driver of the events.

Right now, the market is additionally worried about non-routine events, like the Ukraine/Russia war and its effect on energy and item costs, which have already been taken care of in higher expansion.

To battle expansion, the Fed and other national banks have been forcefully raising loan costs to bring expansion down to their objective of around 2%.

During the time spent raising transient loan costs, which are presently at 3.75% to 4.00%, the Fed might be excessively forceful and overshoot a loan cost that is suitable to cut down expansion, sending the economy into a recession.

A recession is a point at which the Gross Domestic Product (GDP) growth pace of a nation is negative for two continuous quarters or more. It can be detected even before the quarterly GDP reports are out, in view of key financial markers like assembling information, a decrease in wages, work levels, and so forth.

Economists now forecast the GDP to contract by 0.2% annually in the first quarter of 2023 and by 0.1% in the second quarter. In the July survey, they expected 0.8 percent growth in the first quarter and 1 percent growth in the second quarter.

Employers are expected to respond to slower growth and lower profits by cutting jobs in the second and third quarters. Economists believe nonfarm payrolls will decline by an average of 34,000 a month in the second quarter and 38,000 in the third quarter.

Forecasters have raised their expectations for a recession as they become increasingly skeptical that the Fed can continue to raise interest rates to cool inflation without causing additional unemployment and a recession.

Although an economy can show signs of deterioration long before a recession occurs, the most common method of determining whether a country is in a recession or not takes time.

What happens in a recession?

  • Excessive printing of currency has led to a surplus of notes, whose circulation is reducing inflation.
  • The government’s Treasury is facing huge borrowing, and the economy is going into debt. Purchasing bonds from banks to give securities to other economies
  • National banks raise financing costs to dial the economy back in order to restore expansion.
  • Higher loan costs increase the likelihood of a downturn, prompting layoffs, fewer positions, and decreased shopper and corporate spending, among other effects seen in a slowing economy.
  • As organizations and shoppers become restless about the economy, they clutch their cash and cut spending.

Every recession has its own set of circumstances and outcomes. As a component of the monetary cycle, economies encountering development are likely to fall into a recession.

Oversupply: Organizations will frequently expand their production to meet customer demand during a financial expansion. When demand peaks and begins to fall, an excess of labor and products that aren’t consumed can cause a downturn, with organizations producing less and cutting back while individuals lose purchasing power and utilization continues to fall. rising inflation and unemployment below its natural rate

Vulnerability. Not knowing how the economy will change makes business choices more dangerous. Wars and pandemics are two circumstances that can make shopper patterns capricious in the short, medium, and long haul, hence creating financial vulnerability. Since organizations and individuals hold off on spending and venture choices, financial movement declines.

Excess: By and large, monetary air pockets form when the cost of something abruptly ascends because of hypothesis, market patterns, or shopper certainty. Financial backers get it up, expecting to procure a return from the cost increment. Supply exceeds demands.

High Bank Rates: When the pace of revenue is exceptionally high, there isn’t a lot of liquidity on the lookout. So the degree of buy-in will fall, causing a financial lull. This occurred in the United States in 1980, when interest rates were raised to combat stagflation. However, all things considered, this brought about a downturn.

Potential Frauds: Now and again, banks, enormous partnerships, and even government foundations utilize sketchy practices and criminal operations to help productivity. At the point when such plans and embarrassments are uncovered, the whole economy endures. For example, a large organization borrowed a huge amount of money, and at the time of returning the loan, the key stakeholders ran away or declared bankruptcy using illegal means.

Impacts of War: For the most part, we see a monetary stoppage after a conflict. It is the general, delayed consequence of the pressure a conflict causes on an economy. The Russia and Ukraine war is causing trade barriers, and food insecurity, on the other hand, is a global issue created because of global panic.

Falling Wages: When the wages and pay rates of laborers don’t increase at a similar rate as the expansion of the economy, the buying power of the public will decrease. He cannot manage the cost of the very labor and products that he used to. This can cause a financial stoppage.


Understanding the Business Cycle

 The business cycle alludes to variances in the development of the monetary result, considering the consistent development of the “possible result” of the economy.

Yield is characterized as genuine GDP (gross domestic product), and the potential result is the degree of result that the economy can accomplish while utilizing every one of its assets—individuals, gear, regular assets, and innovation—in a reasonable manner, without coming down on costs in the economy.

In a developing economy, families request more labor and products, organizations recruit more specialists, and wages and costs commonly increase. This stage closes with a peak in monetary movement.

business cycle

The vicious circle of banks and corporations


Before a lender wants to lend money to your business, they will first examine its financial condition, including its accounts and general debt obligations. Your lender is primarily concerned with ensuring that your company does not default on existing loans or other obligations as a result of the loan.The lender will also want to make sure that your business has the resources to repay the loan with interest.

After the bank’s credit committee has approved the loan, the bank prepares the loan conditions, which contain the most important loan conditions. The terms form lists the main points included in the loan agreement that you can negotiate with the lender at this stage.

The borrower is then sent a letter of commitment with a form of contract. If the borrower agrees to the terms, a loan agreement is drawn up. Once this and any related documents, such as guarantees or mortgages, are signed, the borrower can withdraw the financing.

Banks provided business loans at a lower interest rate, which caused a large increase in the debt amount during the corporate financing cycle.

During COVID, companies were taking huge loans from banks to use the schedule, increase workers’ wages, and make them work 16 hours a day to get artificial intelligence.

Automation tools are now being developed, and economic growth is slowing down without the business improving. Companies face huge debts, and there is a cycle of layoffs to cut costs and reduce corporate debt.


Global Markets Decline


Why do companies lay people off?

Cost reduction: One of the main reasons for layoffs is when a company decides to reduce costs in some way. The need may be that the company is not making enough profit to cover expenses or needs significant additional funds to pay debts.

Downsizing: Downsizing also occurs when a company has to eliminate some jobs due to additional staffing, outsourcing, or changing roles. A company may want to eliminate unnecessary jobs to make operations more efficient.

Relocation: Moving a company’s operations from one area to another may also highlight the need to let go of some employees. The closure of the original location will not only affect the laid-off employees but also the economy of the surrounding community.

Merger or Takeover: When one company buys another or merges with another, the management and direction of the company may change. When new management comes in, chances are they will come up with new goals and plans, and this can lead to layoffs.

Immediate reasons to fire

Pandemic Boom: During the pandemic, demand exploded as people were locked in and spent a lot of time online. Aggregate consumption turned upward, after which companies increased their production to meet market demand.

Overpayment During the Pandemic: To meet demand, many technology companies have started hiring, expecting that the boom will continue after the pandemic. However, consumption decreased as restrictions were eased and people began to come out of their homes, bringing with them large technology companies. Some of these resources were hired at a higher price due to the sharp increase in demand.

Fear of recession. With demand returning to pre-Covid levels, a debt bubble about to burst, and fears of a recession, these companies are cutting costs by closing imperfect projects and shedding excess high-paid resources they hired to boost growth.

Russian-Ukrainian War: The war also affected layoffs, making the market more volatile. This is clearly seen in the volatility of the stock market.

Inflation: The increase in inflation has also affected several world economies, which has caused a major crisis in the labor market as well. The world is currently pressing the reset button to overcome all these ups and downs.

This chart shows a comparison of some of the biggest contributors to the U.S. Consumer Price Index (CPI), on a year-over-year basis, as well as core and headline CPI, between February 2020 and January 2022. Medical care services came in at 5.3% in February 2020 and 2.7% in January 2022. Shelter came in at 3.3% in February 2020 and 4.4% in January 2022. Apparel came in at -0.9% in February 2020 and 5.3% in January 2022. Core CPI came in at 2.4% in February 2020 and 6% in January 2022. Food away from home came in at 3% in February 2020 and 6.4% in January 2022. Food at home came in at 0.8% in February 2020 and 7.4% in January 2022. Headline CPI came in at 2.3% in February 2020 and 7.5% in January 2022. Electricity came in at 0.6% in February 2020 and 10.7% in January 2022. New vehicles came in at 0.4% in February 2020 and 12.2% in January 2022. Energy (oil and heating) came in at 2.8% in February 2020 and 27% in January 2022. Used vehicles came in at -1.3% in February 2020 and 40.5% in January 2022.

Case of Meta Layoffs 

The company had 87,000 employees in September 2022. Meta’s layoffs come after the company hired 15,344 people in the first nine months of 2022, a quarter of whom were laid off in the last quarter.

“In the early days of COVID, the world was rapidly getting online, and the rise of e-commerce led to higher revenue,” Zuckerberg explained in a blog post. He added that while everyone, including himself, believed the momentum would build, it failed.

He cited the current macroeconomic downturn, increased competition, and a decline in Meta’s advertising revenue as reasons for the layoffs. “I did it wrong, and I take responsibility for it,” said the CEO.

Meta also announced several benefits for departing employees.

  • First, the company pays 16 weeks of basic salary plus two weeks of salary for each year of employment.
  • In addition, it provides six months of additional health care to workers and their families, as well as relocation and immigration services for laid-off workers.
  • It is reasonable to mention that Meta lost $9.4 billion in 2022 due to its metaverse technology.
  • According to the profit claim for the quarter that ended in September, it plans to spend even more on business in the future.
  • The company’s revenue fell 4% to $27.71 billion in the third quarter of 2022, the third quarter in a row. Meta’s quarterly net income fell 52% year over year to $4.4 billion in the third quarter of 2021 
  • The company’s expenses also rose 19% to $22.05 billion, causing its free cash flow to drop by at least 98% or a quarter.
  • In India, Meta grew by 74% in FY22, when turnover was 16,189 crores, and profit also grew by 132% to 297 crores.
  • The bad news for the meta doesn’t end there; its stock price fell more than 70% over the past year and lost $700 billion in market value.

Rate of Unemployment

Due to COVID-19 layoffs, more than 22 million American resumes flooded the job market. The situation is unprecedented and presents unique recruitment opportunities and challenges for employers. With this in mind, organizations must create new recruitment strategies to capture the phenomenal employees who are currently looking for work.

The unemployment rate was equal to or below the pre-pandemic rate in three-quarters of OECD countries in April. Moreover, the number of unemployed workers in the OECD also continued to fall, reaching 34.0 million, 0.5 million below the pre-pandemic level.

In the euro area, the unemployment rate remained stable at 6.8% in April for the third month in a row. It turned upward in one-quarter of the euro area countries, with the largest increase observed in Greece (Table 1).

Outside the euro area, the unemployment rate fell markedly in Colombia and more modestly in Australia, Canada, Denmark, Iceland, Israel, Japan, and Mexico. However, unemployment increased in the Czech Republic and Hungary. More recent data show that in May 2022, the unemployment rate remained stable at 3.6% for the third consecutive month in the United States.

It should be noted that the unemployment rate does not capture non-employed people who are outside of the labor force, either because they are not actively looking for a job or are not available for work.


unemployment rate


  • The rise in unemployment that occurs during a recession results in an increased economic hardship that is borne unequally across society (with different groups being affected in different recessions). This, in turn, reduces the opportunities available to households directly affected by the recession and can have long-term effects on their health, learning, achievement of qualifications, and social mobility.
  • The business failures that occur during a recession result in a permanent loss of output by these businesses and the destruction of productive capacity. This is especially costly when businesses have not been innovative, have specialized knowledge, or form a key part of a supply chain or network.
  • A recession can also have a longer-term impact on a nation’s public debt as governments experience a reduction in tax revenue but need to fund increased expenditures and transfer payments (through their efforts to stimulate the economy, provide social welfare, and support businesses).

How to Hire an Employee post layoff in IR 4.0?

Skills for IR4.0


skills for IR4

Industry and technology upgrades


  • What is the marginal cost of providing resources and support to one employee compared to the marginal cost of a young person’s long-term employment?
  • What is the financial value of the investment in a country-specific situation?
  • Does the income flow directly back to the investment company or does it support larger community outcomes or both?
  • Does the investment result in direct employment, and if so, what is the level of retention?
  • What are the results, and how are they measured?
  • What strategies and partnerships are needed to engage other stakeholders in the ecosystem?

Reinventing the HR function

As business leaders begin to consider proactively adapting to new talent, they must address the right needs and demands of company.

There is a critical shortage of skills. They need to understand that talent.

As the pace of skill change accelerates in both old and new roles across industries, proactive and innovative skill development, and talent management are no longer long-term problems that can be solved by previously successful tried-and-true methods or the immediate replacement of current employees.

This requires an HR function that is rapidly becoming more strategic and has a seat at the table.

Using new types of analytical tools to identify talent trends and capabilities and provide insights that can help organizations align their business, innovation, and talent management strategies to maximize opportunities to take advantage of changing trends.

Candidate sourcing tools: from programmatic advertising that automates the purchase and optimization of job ads to information systems that instantly retrieve candidate contact information A number of innovations are available for proactively sourcing candidates.

HR Chatbots: Ideal for large-scale recruitment, chatbots engage job seekers where they are most likely to respond, such as through social networks, career sites, and email. Powered by artificial intelligence, HR bots can collect contact information, screen candidates, and answer candidate questions.

Skill Assessment Tests: Strengthen your recruiting efforts by weeding out unqualified candidates and ranking top talent based on proven skills and competencies before they hit your recruiting team’s radar.

Virtual interview software: Unlike Skype or Zoom, video interview platforms are designed specifically for employment. Recorded one-way video interviews can reduce first-round interview time because candidates’ recorded responses to predetermined questions can be shared with hiring teams for viewing and evaluation anytime, anywhere.

New strategies and tools need to be implemented, and employee training on new and effective tools has to be done.

Spending money on operational costs

Design a well-structured recruitment process.

A technology stack can only optimize recruitment if it is part of a well-designed process. Therefore, HR professionals must implement a structured recruitment framework.

  • Assemble recruitment teams of recruiters, hiring managers, and stakeholders.
  • The roles and responsibilities of each member are clearly defined.
  • Set and communicate goals, including time frames and the average time to hire for each part of the recruitment process.
  • Create a recruiting process flowchart that illustrates each step of your ideal recruiting process from the moment the need for new hires is identified to the moment new hires begin the onboarding process.

Understanding Employee Lifecycle



Job-Based Selection 

Job-Based Selection uses the “last hired/first fired” concept. Because tenure-based systems reward workers based on their tenure, there is less risk that older workers will sue employers under the ADEA for age discrimination. However, the use of a civil servant does not protect the employer from new risks arising from possible discrimination against other protected groups. In addition, using position-based selection may require the employer to hire workers with outdated skills or less technological savvy.

Selection based on employee status

Employers who have part-time or contingent workers on their payroll may want to lay off those workers first to ensure greater job security for the remaining core workers. If the employer’s workforce does not consist largely of contingent workers, this method alone may not be sufficient to meet downsizing needs and may need to be used in conjunction with other selection criteria.

 Merit Selection 

Although this method of selection is often preferred by managers because it provides greater flexibility to weed out marginal or poor performers, it should be carefully scrutinized. Since the selection criteria for benefits are based either partially or completely on performance data, which is not always objective, may contain evaluation bias, and is poorly documented, this method has not been shown to provide an accurate qualitative means of classifying differences in the work performance of individual employees in the selection of employees to be laid off. Employers who choose this method must carefully document their decisions to retain or reduce all employees in the selection pool.


The importance of improving the skills of the workforce has increased compared to earlier days. That is why new skills are very important and in demand because they are introduced every year in almost every organization.

Upskilling the workforce helps companies ensure that employees have the right skills and can adapt to a changing environment. Manpower training takes place here.

The main benefit of upskilling your workforce is to help them improve and stay productive so they can achieve better results in achieving their organization’s goals. Many studies have shown that training existing employees saves more money than hiring new employees. Therefore, management skills programs would be more profitable than switching to a new recruitment cycle.


Developing targeted candidate profiles and sourcing initiatives

If you have recruited and now need to hire quickly, consider how the job requirements may have changed due to changing business demands. Solicit feedback from job stakeholders to develop comprehensive candidate profiles that go beyond descriptions of required skills and knowledge to include desired behaviors and personality traits, then assess candidates’ knowledge and experience for the job.

Use candidate profiles to write targeted job descriptions and define sourcing initiatives. Build a list of past candidates and employees that match candidate profiles and refer them to job postings, social networks, and referral sources to prioritize and source talent accordingly. Hire former candidates, including layoffs, to quickly fill your pipeline with top talent.


Explore your workplace’s internal talent.

Structural barriers often prevent hiring from within organizations. However, the concept of inextricably linking recruitment, retention, and internal mobility is gaining traction. According to recent LinkedIn data, 73% of HR professionals said that internal recruiting is increasingly important to their organization. Before looking for external candidates, assess the skills of current employees to identify those who could fill the position to which the laid-off employee has chosen not to return.

Learn How to Improve Your Recruiting

Use of data analytics: companies need a new approach to workforce planning and competency management where better data forecasting and planning metrics play a central role. Early mapping of emerging job categories, anticipated layoffs, and changing skill requirements in a

The changing environment offers companies an opportunity to effectively recycle talent.


Corpradar is a next-gen digital IR 4.0 corporate media house that combines the power of technology with human capital to bring decisive and insight-driven content on key business affairs. In an absolute sense, we create a space for leading business houses and visionary corporate leaders to chime in with their opinions and thoughts on relevant industry-specific matters that provide a detailed expert perspective for our followers.

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