In 2008, I was made redundant from my graduate role as an Investment Analyst at Everest Babcock & Brown.
It was the middle of the Global Financial Crisis, and after studying for 17 continuous years to land this role, it seemed like the industry I had chosen was imploding.
Losing your livelihood unexpectedly in these circumstances can have a profound psychological impact on the person being made redundant. A study conducted in 2013 showed that following unexpected job loss, people showed increased levels of depression and similar mental health issues. Luckily, I was too young and too early in my career to experience this (I was 25 at the time and less than 18 months into my career). Instead, the redundancy also gave me the push to finally scratch my entrepreneurial itch full-time.
In retrospect, my redundancy didn’t have anything to do with my usefulness or whether I was needed. In fact, most recent redundancies are cyclical and based on changes in the economic outlook and the availability of capital. It’s (usually) not personal. Business cycles are inevitable and downturns can be considered healthy and needed to help moderate excesses built up in other stages of the cycle. For this reason, I prefer to use the term “layoff” which seems a little less personal.
Rates of layoffs are likely to vary by industry
This year, and maybe next, many people will be laid off. This phenomenon is particularly acute in the startup and tech industries, where valuations have fallen, and funding has largely dried up. According to TrueUp, which tracks tech layoffs, 97 companies have announced layoffs this month alone. The spike in crypto-related layoffs is not surprising given the fallout from the recent collapses of Terra/LUNA, Celsius and Three Arrows Capital.
We expect this to continue as central banks continue to raise interest rates and quantitative tightening accelerates to try and contain inflation. Fortunately, overall global unemployment rates continue to remain low.
Interestingly, the data shows the sectors that were less affected by COVID-19—defensive sectors like education and healthcare—are seeing more material impacts and layoffs. For example, universities in Australia used the pandemic to enact structural redundancies, that is, cutting jobs as a result of changes in the economy. Now that lockdowns have been lifted and students are returning to the classroom, universities are scrambling to rehire many of the casual employees that bore the brunt of the restructure.
So, you’ve been laid off—what now?
For the many laid off, please understand that this has nothing to do with whether you are needed or your usefulness. As it was in my redundancy, it is a natural byproduct of business cycles and economic conditions.
For many of you like me, it could be the best thing that might happen to you and lead you to a more fitting role, better boss or mentor or even allow you to unleash your entrepreneurial calling. Some of you may even choose to put your hand up for voluntary redundancy to fund the leap into that side hustle you’ve been working on. Data from the Reserve Bank of Australia shows that since the pandemic began, job mobility has increased since the beginning of the pandemic in Australia, the United States, and the United Kingdom, in part due to redundancies and the Great Resignation. So, if you are thinking of using this as an opportunity to go after something new, you’ll be in good company.
For savvy business owners that are fortunate to not have to look at layoffs, now is the right time to invest in human capital. We are certainly doing so at Aura Group where we’ve grown the team by half a dozen in the last two volatile quarters.
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