U.S. companies' layoffs really not best business practice in final analysis

-- Neue Luzerner Zeitung, Lucerne, Switzerland - Feb. 12

Posted: Monday, February 19, 2001

Typical America: A wave of layoffs is crossing the country and most people still see something positive behind it. What in Europe would lead to huge protests is interpreted in the United States as management strength.

So have the company bosses really got it under control, as they want to make U.S. citizens believe? Or are the Americans simply going with the lesser of two evils? The fact is that many Americans are heavily in debt from their stock market speculation. Their motto was: don't save, buy shares on credit. During the times of euphoria as the markets rose, many Americans accumulated huge sums of money -- but most unfortunately only on paper.

Now the market fever is over and prices are in the basement. Recession anxieties are doing the rounds. Many people -- one American in two owns shares -- are facing ruin, since their debts are suddenly bigger than the value of their portfolio. That's why many are relying on the hope that the stock market will go up again, and are keeping quiet in the meantime.

This financial waiting game could work out. However, the policy of layoffs, as practiced today by U.S. companies, could turn out to have a boomerang effect.

"Just-in-time employment" doesn't only have lasting consequences for the size of the labor pool. It is an idea from the warehouse, used when dealing with actual merchandise. So working people are turned into yet another product, cut back just to be on the safe side when the economic picture is looking bad. They can always be re-employed if things change. But it's an open question whether firms that treat their staff so badly can stay attractive in the employment market.

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