What is Downsizing?
Downsizing is a commonly used euphemism which refers to reducing the overall size and operating costs of a company, most directly through a reduction in the total number of employees. When the market is tight, downsizing is extremely common, as companies fight to survive in a hostile climate while competing with other companies in the same sector. For employees, downsizing can be very unnerving and upsetting.
More than 400 companies have shut down while 2,000 others retrenched tens of thousands of workers due to economic difficulties last year.
A latest report of the Bureau of Labor and Employment Services (BLES) showed that the closures resulted in the permanent loss of jobs to 16,847 workers while retrenchments resulted in the lay-off of 30,022 workers.
The biggest casualties were reported by the manufacturing sector which accounted for 56.5 percent all closures and retrenchments last year.
Manufacturing companies that closed shop numbered 107 while 658 others cut down the number of their workers. Casualties reached 15,297.
Hardest hit segments of the manufacturing sector was the food and beverage industry which reported 98 companies going belly-up and 589 others resorting to retrenchments. It lost a total of 14,681 workers.
The top two industries that reported the biggest number of laid-off workers belonged to the export sector which had been vocal over a strong peso that undermined their ability to survive.
They had earlier reported closures and retrenchments but confirmation by a government was only made this week with the BLES report.
Manufacturers of equipment and apparatus were the second biggest victims with seven firms closing down and 37 others downsizing and accounting for 5,834 workers who lost jobs.Third biggest sector hit by lay-off and closures was the garments industry.
The industry reported 25 companies that closed and 57 others that retrenched workers. These firms accounted for 3,997 workers losing their jobs.
The services sector also reported a high rate of closures and retrenchments. It admitted to laying off 18,718 workers with the closure of 288 establishments and retrenchment made by 1,305 others. Retail trade and real estate firms topped the list of casualties.
Cause of downsizing:
The primary reason is to make the daily operations of a business more efficient. In some cases, it becomes apparent that a business has too many employees. Because there has been a decline in demand for the company's services, or because a company is running more smoothly and efficiently than it once was.
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