Answer:
Increasing market rivalry, decreased manufacturing activity, and technology innovation that has replaced human labor have all been proposed as explanations for this occurrence. While all of these variables are crucial, such explanations ignore the political and institutional components of the transition. Dec
Step-by-step explanation:
IBM, the world's largest computer manufacturer, announced the first layoffs in its 80-year history in February 1993. Throughout the 1980s, the firm had seen a gradual drop in profitability and slow development due to increased foreign and local competition; personnel modification and cost reduction looked necessary. Nonetheless, IBM's decision was a significant break from the company's well-known reputation of lifetime employment. It has prided itself on looking after its personnel throughout its history. However, when seen in a larger context, what was actually surprising was that the firm had managed to avoid layoffs for so long; most of its competitors had already embraced the practice as necessary. Since the 1980s, corporate America has been subjected to waves of downsizing. Firms made layoffs amid economic downturns long before the 1980s. However, prominent US corporations' layoff policies changed dramatically in the 1980s. Previously, layoff denoted a temporary suspension of employment with the expectation that laid-off workers would be called back when economic conditions improved, but it has increasingly evolved to indicate permanent termination (see Figure 1 attachment). Furthermore, unlike in the past, even strong and lucrative businesses have begun to downsize. For example, Xerox stated in 1993 that it would lose 10,000 positions, or about 10% of its workforce, despite the fact that the firm had been successful for several years before to the announcement. Its CEO emphasized that the firm needed to be lean and adaptable in order to compete effectively. What is the cause of this dramatic shift in layoff policy among significant US corporations? Increasing market rivalry, decreased manufacturing activity, and technology innovation that has replaced human labor have all been proposed as explanations for this occurrence. While all of these variables are crucial, such explanations ignore the political and institutional components of the transition. In recent research, I show that altering inter-class power dynamics inside big US corporations were behind the shift in layoff policy. Several prior studies have found that wealthy shareholders and senior executives advocated for permanent layoffs as a way to increase shareholder value—the company's stock price. However, these studies do not paint a whole picture of the inter-class power struggle over layoff policy. They neglect how employees and labor unions resisted the modification of layoff practices and how the larger political context limited their capacity to fight while emphasizing on the involvement of shareholders and senior executives. In my research, I look at labor unions' opposition to the transition from temporary to permanent layoffs. Labor unions reportedly fought back vehemently, but given their waning political clout, it's unclear how effective their opposition was. Industrial unions, particularly in critical industrial industries like automotive and steel, previously played a crucial role in building a system of statutory laws and unwritten conventions that compelled employers to ensure that employees' job security was linked to their reciprocal commitment to the enterprise. One move that signaled this commitment was temporary layoffs followed by recall. During economic downturns, corporations used this approach to reduce employee size while workers remained loyal to their original employers. However, in the late 1970s, the industrial unionism that dictated employment policies in many big US corporations began to crumble. As the power of industrial unionism faded, a new set of ideas arose to modify US employers' employment policies. New power groups in financial markets, particularly major institutional investors (e.g., mutual and public pension funds), began to put pressure on management to improve profitability and maximize shareholder returns as many enterprises suffered from a chronic fall in market share and profitability. Firms began to actively participate in substantial downsizing in order to preserve, recover, and even enhance their stock price, owing to institutional investors' pressure and the Reagan administration's pro-business posture. This strained the relationship between employees and their bosses even further.