The far-reaching impact of job loss

Vishal Garg, the Founder and CEO of Better, the first and only digital-first Homeownership Company fired 900 of his employees over Zoom.

According to BBC, Mr Garg said staff performance and productivity, and market changes lay behind the mass-firing of what he said was 15% of Better.com’s workforce.

“If you’re on this call you’re part of the unlucky group being laid off,” said Vishal Garg, on the call, later uploaded to social media.

Comments on social media said it was “cold”, “harsh” and “a horrible move”, especially in the run up to Christmas.

“Last time I did [this] I cried,” Mr Garg told the staff on the call. “I wish the news were different. I wish we were thriving,” he said. This time his tone was measured and he referred to notes on the desk in front of him, the BBC indicated.

Around the world economies are all being affected due to different factors, with the pandemic as the most prevalent one of them all. Companies are ‘clambering’ to survive; others are scaling down costs which at times includes layoffs.

Where is this leaving employees? 

Job loss, no matter the reason behind it, never hits easy. 

The emotions that come with losing a job are hard to handle. And because of that, it always takes time to process, says Margaret Arinda, an account executive.

She says losing a job can alter your entire life especially when you have a family to support. 

“What that does to your career however can also be overwhelming. Getting fired puts a big hole on your CV, besides, it also affects your zeal for work in a way of thinking that you are not enough or don’t deserve success,” she says.

Research about the ‘Scarring effects of sudden involuntary unemployment’ shows that involuntary separations can destroy value, either because they break a high quality worker-firm specific match or because job (sector) specific skills are lost. 

In that case, wages can fall, either because the worker has to rebuild her job ladder searching for a new high quality match, a process that can take time and involve several job transitions, or because she has to acquire new skills.

Additionally, the unemployment spell itself can depreciate human capital interrupting learning by doing processes, particularly in early stages of working life.

Involuntary unemployment spells can have significant costs for workers in terms of future wages, the probability of being unemployed, the research indicates.

How you ‘lay off’ matters 

Workers that receive early signals of displacement however, can prepare for the event in various ways, such as increasing the intensity of on-the-job-search while their job still holds or accumulating assets. Anticipation should allow them to create a buffer that can smooth out the effect of displacement.

Workers that are surprised by displacement, on the other hand, might have not been searching for a job as actively, so on impact their set of new job options might be worse.

Jules Bitariho the managing director of an IT company says whereas laying off employees can be inevitable at times, how you fire an employee should be considered carefully.

“There are legal implications to consider, managers and human resource need to be aware of that. On the side of employees, how you go about it and the sympathy you approach it with can help workers deal with the sad news,” he says.

Arinda recommends employees to beware of the current economic crisis; give their jobs their best but also, make sure to create multiple sources of income.

“At this point, no one should survive on just one source of income. Times are hard; being resourceful is the best asset anyone can possess. Be alert and creative.”

Source: the new times