Lay-offs may cause companies to sustain higher long term costs

[True Believer]

Retrenchment is the preferred method for employers to make sharp short term cost reductions to regain a competitive edge. This mainstream practice to incur a one‐time cost to gain annual savings appears to be grounded in sound financial logic. However, forced lay-offs may actually cause companies to sustain higher longer term costs.

 

[ThomasEddy]

Retrenchment is the preferred method for employers to make sharp short term cost reductions to regain a competitive edge. This mainstream practice to incur a one‐time cost to gain annual savings appears to be grounded in sound financial logic. However, forced lay-offs may actually cause companies to sustain higher longer term costs.

Retrenchment is just to buy more time for companies who either over predict the number of staff their hire as to the out put expected and push it back to the employees. Then after retrenchment some companies will start to rehire in 3 mths time. That raises the question why retrench in the first first?