When you hear about a business reducing its number of employees, you may immediately think of layoffs. News stories sometimes make this mistake too, assuming when a company decides to cut back that layoffs must be on the way. But layoffs are just one of many ways an employer can employ fewer workers.
The fact is, if an employer does nothing, its staff will tend to shrink over time. Workers die, retire, or stop working because of illness or injury. An average employer in normal times can expect to lose more than 2 percent of workers each year from these effects alone. A larger number of workers leave to pursue other interests or more lucrative jobs elsewhere. This varies considerably depending on the company, but it is fair to say that in a normal job market, an employer has to make an effort to keep employee turnover below 20 percent.
These days, it is not so easy for workers to get jobs elsewhere, but an employer can still easily cut back by 7 percent in a year, or reduce staffing by half in less than 10 years, without having to fire anyone. And it can speed up this process if it wants to by making raises harder to get or by offering token payments and job search assistance to selected employees who are willing to leave on their own initiative.
Layoffs are needed when facilities close and when employers are taken by surprise by business events, but most of this year’s job cuts will be part of business as usual, occurring not as a consequence of business events, but at random times as a result of events that take place in the lives of the workers.