In the phase of economic slowdown labor force in the economy suffers from closing down of many plants. The existing plant to cut down expenses cut off the strength of workers. There is increasing concern on the impact that economic recession has on plants shut down and corresponding massive worker’s lay off.
Plant close down is a situation when there is a temporary shutdown of a plant operating in a particular site. Sometimes instated of shut down the entire business, owners take the decision to close down one or more branches that are running with loss. Close down of a plant has an obvious impact of depressing job market. Lay off is a condition where workers looses their permanent jobs not because of their fault but due to depressing demand of workers.
Business, labor and government have different roles in the phase of plant close down and workers lay off.
Singapore is currently going through a decline in industrial production. Economic insecurity following several crises has taken away investors fund outside the nation (Gribble& McBurnie, 2015). In order to mitigate the impact of fund outflow Singapore takes the way out through raising fares of western imports. However, the counteract measure actually aggravates the problem. Major importers are now withdrawing import requests. Government in Singapore has relaxed arrangements for monetary boost in the economy which further worsens the situation. Laborers from Indonesia constitute a major part a Singapore workforce. With workers lay off they come back to their native on account of losing jobs and occupational insecurity.
Annual employment report of Singapore in 2012 indicates that despite an increase in overall employment rate in that year, workers in manufacturing and tertiary sector have suffered from redundancy within the sectors. In fact the redundancy rate reached to 5.8% from earlier 5.5%. Additionally, layoff rate also rose to nearly 10% (Smith et al., 2015)
In 2012, Walt Disney has shut down its game studio named as LucasArt. This resulted in additional cut down of working labor force. Significant unemployment in Singapore has resulted from the decision of lay off workers in Motorola and Cell Phone. The companies lay off nearly 700 employees (“Layoffs in Singapore after Disney shuts down game studio LucasArts”, 2017)
The evidences show Singapore is suffering both from shut down of manufacturing plant and cutback of workers. Studies shows the business houses are taking drastic decision of close down or lay off huge number of workers realizing increasing cost and restructuring of business houses.
Business can play an important role to overcome the misfortune of laborers in the phase of plant closing. Management committee in business houses can take strategic action to diminish the incidence of plant closing. The team should stand to carry out measures for raising workers remuneration and bear the cost of legal formalities in times of plant closing or cutback. The major areas of focus for business are- creating potentiality of workers to work even in unfavorable or hazardous situation, it should have administrative contacts, arranging training program with the objective of job counseling or providing assistance for getting well placement. The business should have a board of management and team to investigate in complex situation. It should also maintain official records of legal activities, proper planning of plant method and even has records or documentation for discriminating areas (Grund & Martin, 2017).
There are some additional strategies that business undertakes to look after these issues. Every workplace should be well documented. The documentation includes keeping records of complete planning method of plant with special care given in cases of operation in distinct workstations. It should focus on conducting the study of complete hygiene in the industry. The chemicals used in the plant should be recorded. Business house should be kept updated though analysis of review and report published in the given year ((Müller, Fackler & Stegmaier, 2016). Documentation is not a onetime task. The documents must be updated with changing economic scenario. However, this is not very difficult task. Documents like personal records and those related to pay roll are easily available.
The immediate impact of the decision of employee lay off is hurting the confidence of workers who are the direct victim of such decision. In the phase of job loss the workers loses all the motivation. The incidence of lay off is not always in hands of organization. Sometimes it becomes an inevitable situation. Under this circumstance workers should patiently analyze the situation and then take any decision. The technique of refraining is recommended to be the best way to avoid adverse situation (Fossum, 2014). Workers should accept the fact that lay off is a part of profession and they can get new and better opportunity in their profession. They have two options either to carry on their existing profession and try to find job somewhere else or to switch their profession to engage in something that seems more appealing.
The existing workers who do not face lay off like workers in higher rank such as managers or in some equivalent position should support others to overcome the difficult situation. They can inspired the laid off workers to stay motivated in their life and help them in finding new jobs (Jolkkonen et al., 2017). Direct communication is the best effective way to motivate the workers. There are many workers who value their senior’s words. The organization should allow one to one discussion to help the workers in understanding the situation and overcome soon.
Government always stands as a representative of common people. Thus, in the difficult phase it has a crucial role to play. In Asian countries private funds are very much flexible. In most of the developing nations policy of liberalization eases investment foreign fund. However, in some situation government grants flow of foreign funds due to pressure from powerful countries. The business environment in Asia is changing rapidly giving Asian market important position in international markets. In fact, in some product growth of Asian market has taken dominating position in world. These sectors include automobile, retailing sectors having multiple brands (Knox, Agnew & McCarthy, 2014).
The continuous development in some sectors may hurt other sectors in the economy. Here comes the role of government. The responsibility of the government is to maintain a balance between investment in domestic market and that in international market. In case of government’s inability to maintain the balance there is huge possibility of breakdown (Jung & Kuester, 2015)
In some nation like Singapore government is successful in fulfilling their responsibility. The case of Seagate and that of Motorola can be used as an example. Government disallowed compensation plan of Seagate’s that comprises of 2000 workers by prohibiting liquidation of company’s property. Before granting permission of liquidation government made sure that the company has provided proper compensation as per the existing trade act (Wilensky, 2015)
In case of Motorola as well, government took same restrictive measure. The company decided to lay off approximately 700 workers in 2008. Initially the case was handled by Singapore judicial system. Later on, government took interest in the matter. At first, the company did not agree to the norms of raising compensation package. They even disagreed to sanction transfer of workers from Singapore plant to their plant operating in China. As a result government had to take some drastic steps as in case of Seagate. Government seeks to international judiciary system to ban liquidation. This affected company’s share value. As a result the company came under the pressure of threat coming from local as well as international investors (“gov.sg”, 2017). With a tremendous pressure coming from investors who were facing loss due to declining value of shares, the company finally changed their decision. Motorola granted the proposal of shifting the interested workers to their plant in China. In addition, company also agreed to pay settlement expenses to these workers. Nearly 450 workers were shifted to China by 2010.
In addition to role played by Business Corporation, company workers and government some measures are taken keeping in mind social aspect. After termination workers often received adverse treatment from different groups in the society. This de-motivates them more (Ahlstrand, & Rydell, 2017). In Singapore after the Company took the decision of lay off 450 workers, most of them received negative response from the society. Viewing this, the government formed a community help group to help these workers.
Conclusion
In times of recession or economic slowdown business may decide to close down some of its non profit operations or cut down employee strength to save cost. The direct victims of this phenomenon are jobless workers. They lack the inspiration of finding new jobs. Business houses should take compensatory measures to help them. Government should also come forward to ensure that companies are taking appropriate measures and can also force them to take some measures as in case of Singapore. There is an adverse impact of this event on society. Thus, social awareness program to change the behavior towards jobless is needed. In short, business houses, government and society have to give more priority to the well being of the nation than their individual interest.
References
Ahlstrand, R., & Rydell, A. (2017). Corporate Social Responsibility in Connection with Business Closures and Downsizing: A Literature Review. Contemporary Management Research, 13(1).
Fossum, J. A. (2014). Labor relations. Mcgraw Hill Higher Educat.
gov.sg. (2017). Gov.sg. Retrieved 10 July 2017, from https://www.gov.sg/
Gribble, C., & McBurnie, G. (2015). Problems within Singapore’s global schoolhouse. International Higher Education, (48).
Grund, C., & Martin, J. (2017). The Role of Works Councils for Severance Payments.
Jolkkonen, A., Koistinen, P., Kurvinen, A., Lipiäinen, L., Nummi, T., & Virtanen, P. (2017). Labour market attachment following major workforce downsizings: a comparison of displaced and retained workers. Work, employment and society, 0950017017706305.
Jung, P., & Kuester, K. (2015). Optimal labor-market policy in recessions. American Economic Journal: Macroeconomics, 7(2), 124-156.
Knox, P., Agnew, J. A., & McCarthy, L. (2014). The geography of the world economy. Routledge.
Layoffs in Singapore after Disney shuts down game studio LucasArts. (2017). Channel NewsAsia. Retrieved 10 July 2017, from https://www.channelnewsasia.com/news/business/layoffs-in-singapore-after-dis/627382.html
Müller, S., Fackler, D., & Stegmaier, J. (2016). Plant-level employment development before collective displacements: Comparing mass layoffs, plant closures, and bankruptcies (No. 27/2016). IWH Discussion Papers.
Smith, C. J., Donaldson, J. A., Mudaliar, S., Md Kadir, M., & Yeoh, L. K. (2015). A handbook on inequality, poverty and unmet social needs in Singapore.
Wilensky, H. L. (2015). Organizational intelligence: Knowledge and policy in government and industry (Vol. 19). Quid Pro Books.
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