Answer:
to make discouraged; worry.
Step-by-step explanation:
To demoralize means to bring someone´s morale down, that is to say, to make someone afraid of upcoming events, to make someone worry about what´s ahead or coming, or, simply to discourage someone. In the passage above, the constant threats of layoffs is what makes the employees worry that their futures in that particular company is not secure and in fact it may be threatened.