As an employer wants to reduce the production cost during the economic recession, he/she could choose to (1) lay off some workers without changing wages or (2) keep all workers but cut wages for all. Which method would you choose? Why?
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Write My Essay For MeManagerial Finance
Economic recession is a period when economic activities have declined. Effective operations of a firm have to be maintained during this period. Therefore, implementing stringent measures such as laying off some of the workers or pay cuts would help in minimizing spending.
Laying off employees is the most effective approach in this case compared to cutting wages. Unlike pay cuts, layoffs mainly ensure that the working climate remains unchanged. Employees’ salaries during an economic recession create a large expenditure budget. The two options aim at reducing on the expenditure but laying off employees ensures that the expenditure is reduced without affecting the productivity of the remaining workforce (Bansal, Jiang & Jung, 2015). The best employees will be left…
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