Many companies are laying-off without replacing and this is causing a lot of unemployed people. The direct effect of the increasing retrenchment by companies is the increasing state unemployment insurance tax upon these companies. The state is paying more unemployment revenues than ever before.
The increasing retrenchment by companies is creating a negative image to the publics. I may suggest that companies adopt other strategies to sustain the employees, for example, reducing the work hours and wages instead of laying-off their employees.
The retrenchment strategies have an impact to the companies, the state and federal governments. Maltby (2010, para 3) is of the opinion that “ adding to the burden, a number of states are running out of funds to pay for their out-of-work populations. With jobless claims swelling and coffers depleting, at least 35 states are hiking unemployment tax rates this year..
. ” Firms are loosing many experienced employees. The state is incurring more budgetary costs on operating the unemployment payment scheme.
To solve the problem of increasing rate of lay-offs, the state has taken several strategies. For example, Maltby (2010, para, 10) observed that In January, President Barack Obama proposed giving firms a $5, 000 tax credit for every new job added and, for those firms expanding payroll, a payroll tax holiday on the 6.
2% Social Security tax. A watered-down version of the proposal passed in a $17. 5 billion jobs bill earlier this month, relieving employers from Social Security payroll taxes on new hires and giving them a $1, 000 tax credit if the workers stayed on for a year.
Benefits Even though the economy is recovering from the recession, there are some employment benefits which will not be obtained by employees. For example, educational reimbursement has become difficult for employers to provide to their employees.
According to Waller (2010, para. 3) “ education reimbursement and training are often cut early. The number of companies that offered reimbursement for undergraduate and graduate classes decreased by 4% and 5%, respectively, according to a 2009 survey by the Society for Human Resource Management.
” Several companies are recovering slowly from the effects of the global recession and the profits generated from the business activities are low.
In my opinion, provision of employee benefits is increasingly becoming difficult and many companies may opt to adopt the strategy for a longer period than expected. A few years ago, employees were enjoying a wide range of benefits but this trend has reversed in the recent past. Financial institutions providing employment services have also been affected and many people cannot access financial assistance.
