Most of us, or even someone we know, have gone through a layoff at some point in our lives. Regardless of how reliable and secure a private job appears to be, the dreaded “pink slip” may happen to anyone, often with no fault of their own. Growing competition, a recession, or even a natural calamity can all result in employee layoffs, and seeing the current state of affairs, it might happen sooner than we expected.
Layoffs and challenging times are best friends; they follow one another at all times. The upcoming recession is likely to be the leading cause of this season’s layoffs. However, don’t forget that being fired and being laid off are not the same thing. A layoff is a temporary or permanent suspension of service by an organization, irrespective of the employee’s competence. Layoffs solely happen because investors want to see free cash flow. Why? To expand even during a recession while also paying dividends and debt.
So far, 2022’s layoffs have been huge. The big brands of the corporate world made it to the news headlines as they struck thousands of individuals at once. A few of the significant layoffs in the business world include:
|Microsoft||Laid off 1,800 employees by July 2022, 200 more employees a month later, and in its third round of layoffs, almost 1,000 employees in October.|
|In July, it terminated nearly 100 staff from the recruitment team, or almost 30% of its workforce. On November 4, about 3,700 staff, or over 50% of its entire staff worldwide, including 90% of its Indian employees as of October 27.|
|Meta||One of the biggest tech layoffs in 2022. Meta, the parent company of Facebook, Instagram, and WhatsApp, announced on November 9 about laying off over 11,000 employees, representing almost 13% of its workforce.|
|Netflix||In May, it laid off 150 employees, and in June, another 300. It wasn’t a large number, but even so, it made the headlines. As the streaming giant just lost over 2 lakh members and is likely to lose more soon, it was done to reduce costs.|
|Amazon||According to news dated July 31, they had to lay off nearly 100,000 employees. This was the biggest straight decline in history. The sacked employees mainly work at Amazon fulfillment centers and the company’s distribution network.|
|Better.com||Possibly the most controversial layoff, as after firing over 900 of its employees in December 2021 over a single Zoom call, the business has been in the news. This year, it laid off roughly 1,000 employees in April after laying off about 200 in March. They have sacked over 50% of their staff since December 2021, claiming that the employees’ poor performance is what led to the layoffs.|
|Blinkit||In March, it is said to have laid off 5% of its workforce, which is about 1,600 employees.|
|Cars24||They bid adieu to nearly 600 individuals, accounting for 6% of their workforce.|
|BYJU’S||They stated in October that they would lay off 2,500 workers, or 5% of their workforce. Even after being valued at roughly $22 billion, the unicorn opted to terminate its staff, blaming the macroeconomic environment and the startup’s intentions to become profitable by the end of the current fiscal year.|
|Meesho||It sacked 150 people from its grocery business in April and another 300 in August after shutting it down.|
Even if you might believe that your employment is secure, your company is not in crisis, and your services are irreplaceable, keep in mind that layoffs are never about you. While we are in layoff season, here are some quick tips to help you figure out what to do next.
#Step1:Calculate how much money you’ll need.
Most experts agree that people must have three to six months’ worth of living expenses set aside as an emergency fund. It usually includes sufficient funds to accommodate basic needs such as rent, transportation, food, and healthcare. People working in industries or fields prone to layoffs should consider putting away more than six months’ worth of expenses.
According to studies, to survive even a slight income dip, families require a minimum of six weeks’ worth of expenses in a month or two to handle a parallel increase in expenses and a decrease in income. Whereas, following a CFPB (Consumer Financial Protection Bureau) survey from 2022, nearly 40% of users had less than a month’s worth of expenses saved up, and another 24% had no emergency fund at all.
#Step2: Review your debt.
Develop a strategy for paying off any debt you may have once you are laid off, including credit card debt, school loans, vehicle loans, mortgages, etc. Try to pay off all of your debt, or at least the minimum amount due each month. Don’t fall behind on their equated monthly installments (EMIs), as this can permanently harm their credit score. If necessary, get in touch with your lender and ask for a term of forbearance, which is a set period during which a lender permits a borrower to stop or lower their payments. Also, avoid borrowing at all costs.
#Step 3: Start saving.
To start saving, set aside money from each paycheck as soon as you get it (try automating deposits into a savings account or investing if you can). It will help you resist the urge to spend money on other things. Start small and gradually increase your savings rate. For instance, you could begin by setting aside 5% of your salary and gradually increasing it. If saving for several months’ worth of expenses is a difficult task for you, set a smaller goal of saving up a few weeks’ worth of expenses instead. Additionally, while you are still employed, ensure that you have all the necessary insurance in place, such as health, life, and vehicle insurance.
#Step 4: Save in a high-yield savings account or invest.
Try using a high-yield savings account for your emergency fund, which provides a potentially higher interest rate or average annual return than a regular savings account, or invest in mutual funds through a SIP, as both are less volatile and safer.
#Step 5: Look out for severance packages.
Research whether you are eligible for a severance package or money provided to sacked employees by their employers. Additionally, if you lose your job, you should also be able to get unemployment benefits from your state and/or the federal government.
#Step 6: Go through your investment portfolio.
You must evaluate your investment portfolio diversification cautiously, asserting that if your employer gives stock options, you wouldn’t want to have too much money invested in that stock, as a layoff usually signals that the company isn’t doing well.
#Step 7: Use your investments with restraint.
To make ends meet in the case of a job loss, it may be necessary to tap into existing investments. Withdrawals from investment accounts can jeopardize your long-term financial planning, so try not to impulsively use your retirement or provident funds.
In the meantime, until you find a new job, you can consider spending your money in the following order:
- Savings accounts,
- Liquid mutual funds,
- Bank fixed deposits (based on maturity date),
- Debt mutual funds,
- Equity mutual funds / Direct equity (subject to market conditions).
Written by: Arpita Chatterjee
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