Introduction
The global economic environment is currently experiencing instability and is becoming weaker and weaker. This has forced many businesses across the divide to take drastic measures to cut down the cost, such as restructuring their operations and reducing their workforce (Cascio, 2005, p.40).
However, these decisions are becoming very difficult for the employers since they have to justify their actions to the labor organizations and the court. Regrettably, these actions have led to court tussle between employers and employees who feel they were unfairly selected (Wagar, 2001, p.852).
Terminations of employee’s contract or layoffs as part of company downsizing policy have generally caused employment discrimination claims. These claims characteristically have always stem from the protected group of workers, for instance disabled employees, minorities, older employees among others, who have been affected by these decisions (Cascio, 2005, p.41).
Additionally, employee’s contract terminations have also resulted into retaliatory acts such as legal actions. On other occasions, get laid off for participating in legal activities such as complaining of harassment, poor working conditions, and request for accommodations among others (Gibson, Hurd & Wagar, 2004, p.892).
Layoffs originally started as an avenue for companies which were doing bad to shed of some of their employees in the face of weak demand, but today companies which are trying to increase shareholders value have adopted this strategy. Wagar, (2001) defined layoffs as a permanent reduction of employees in an effort to enhance company’s efficiency and effectiveness.
Therefore, layoff is part of downsizing which is a process involving the reduction of staff’s complement through streamlining, retrenchment, re-engineering among other activities. Most public sector organizations always rush to stuff layoff as a quick solution to their financial problems. Therefore, the top management must scrutinize all other factors before deciding to layoff workers (Zyglidopoulos, 2004, p.12; Wagar, 2001, p.852).
Economic justification of layoffs has always been cost reduction and increase of revenues. Introduction of new technologies also influences staff reduction when redundancies is aimed at enhancing output per unit input or reduction of cost of production.
Change in consumers’ tastes and preferences impacts on staff reduction especially when the company cannot sustain product lines. Briefly, all factors that affect company’s demand have significant impact on the employees (Gibson, Hurd & Wagar, 2004, p.892).
Legal environment for layoffs
The public sector is an incredibly large employer, considering the many government institutions, entities and agencies. The legal rights of the employees acts as the moderation on the employers not to abuse their discretion of disciplining and firing employees at will.
Heads of government entities and supervisors are also employees and therefore, together with the junior employees have legitimate bases for their rights in the constitution (Zyglidopoulos, 2004, p.13).
However, the government can limit or influence exercise of constitutional rights by the employees through several ways. First, they can regulate employee’s activities. Secondly, the can punish employees who do not adhere to the statutes or organizational rules. Lastly, government can prohibit/ bar the exercise of the claimed employee rights.
On the other hand, both government as an employer and the employees have legitimate interests thus have to protect the needs of each other. Employees’ have interests in job security and promotions, as well as freedom of expression and privacy. Government’s interest is in the services they offer and the interest of the taxpayers (Gibson, Hurd & Wagar, 2004, p.893).
Workers Adjustment and Restraining Notification Act, 29 is the section of the US constitution that protects the workers against unfair dismissal. It requires public and private sector to give advance notice (sixty days notice) to workers prior to mass layoff or close down (Cooper, 2007, p.3).
The workers representative usually delivers the notice to the employees. If there is no representative, a state entity designated to carry out the rapid response activity under section 2864 of the act becomes responsible. If there is not such state entity, a unit of local government, which the employer pays the highest taxes, will carry out the duty (Cooper, 2007, p.3; Zyglidopoulos, 2004, p.12).
The law also protects workers against dismissal or layoff because of practicing their rights. These rights include freedom of speech such as criticizing the administration, demand for better terms of employment, promotions, among others. However, the constitution also acknowledges the need for balance between the employee’s rights and the wellbeing of the public sector organizations.
Therefore, if the employer can demonstrate that by exercising his/her rights deliberately the employee caused damage to the organization or state entity, the constitution does not protect the employee. The constitution on the other hand provides more protection to the employees who comment on matters political, social or concerning community (Gibson, Hurd & Wagar, 2004, p.892; Cooper, 2007, p.3).
Unfair Act of Discretion by employers in the public sector
Employers control key major operations in a workplace such as wage rates, production, layoff, termination and hiring. They normally use their control to undermine workers rights to collective representation and to choose a representative.
In other occasions, the management usually uses their powers to destabilize or neutralize the workers representative. Another unfair act of discretion in public sector layoff is the discrimination with regard to race, ethnic background, politics, religion, gender, disability among others. (Cascio, 2005, p.41).
Despite of the law protecting workers against victimization because of exercising their rights, some employers in the public sector take upon themselves to terminate the contracts of such employees given the opportunity. In such scenario, employees get punished for not cooperating with the administration (Wagar, 2001, p.855).
There are cases where employees have been laid off because they participated on go slow or to demand better terms of employment or because of welfare issues. Top management in the public sector always uses employees’ layoff as a quick solution to the problems that they have created, for instance losses due to their inefficiency, corruption and poor management (Wagar, 2001, p.855-856).
Shortcomings and solutions
Staff layoff in most cases results in reduced motivational levels among those who those who have survived layoff and those who have been send packing. Therefore, management wishing to enhance productivity through downsizing may end up achieving the opposite results because of lack of motivation among the employees (Cascio, 2005, p.43).
Decision to downsize may also weaken the already good reputation of the company, thus can affect its trading in the stock market resulting into low share values (Zyglidopoulos, 2004, p.12). Layoffs inevitably results in workers loss to the competitors mainly in the private sector who benefits from their skills and experience (Zyglidopoulos, 2004, p.13).
In this case, the government do not benefit fully from the expenses incurred training these employees. Training is very important in organizational change and innovation. Therefore, layoff denies public sector the little changes it may have realized due to loss of innovators. Even though layoffs at time are necessary, generally they do the public sector more harm than good (Zyglidopoulos, 2004, p.12-13; Cascio, 2005, p.44).
Public sector can realized its objectives without necessarily reducing the number of employees in organizations. For instance, companies that strive to increase their income may opt to improving its revenues rather than reducing labor cost. This can be realized through increased sales and value addition on its products and services, thus capturing a new market segment.
On the other side, the costs associated with layoffs may still be witnesses even if the company did make cuts on the employees. For instance, low workers turnover will persist unless the organization improves on the working condition (Cooper, 2007, p.4; Cascio, 2005, p.44).
Conclusion
Justification for public sector layoff have been based on increased profitability, enhanced productivity, streamlined structure, and improved strategic position. However, studies have shown that all the above benefits are functions of numerous factors that may not essentially be staff layoff. Amongst these factors are skill level of the staff, teamwork and unity, level of technology used, staff morale among others.
Workers layoffs alone cannot guarantee increased productivity. Most public sector organizations always rush to stuff layoff as a quick solution to their financial problems.
Therefore, the top management must scrutinize all other factors before deciding to layoff workers. Last but not the least, public sector organizations should enact policies that protect workers from any form discrimination and allows them to exercise their rights without victimization.
References
Cascio, W.F. (2005). Strategies for Responsible Downsizing. Academy of Management Executive, 19(4), 39-50.
Cooper, P.J. (2007). Public Law and Public Administration (fourth Ed.).NY: Thomas-Wadsworth ISBN-10: 0495007552.
Gibson, A., Hurd, F. & Wagar, P. (2004). Voluntary Restructuring of Large firms in response to performance decline. Journal of finance, 47(3), 891-917.
Wagar, T.H. (2001). Consequences of workforce reduction: Some employer and union evidence. Journal of labor research, 22, 851-862.
Zyglidopoulos, S.C. (2004). The impact of downsizing on corporate reputation for social performance. Journal of public Affairs, 4(1), 11-25.