When employees are not certain of the security of their positions, the whole economy suffers. Worried employees do not perform as well as those who are secure, thus affecting production. They do not ask for higher wages, which affects the inflation rate. They spend less and save more, thus affecting consumer patterns.
Technology is making it possible to replace experienced workers with lower-paid part-time or temporary employees or with machines. When an employer makes this choice, the company loses not only talent but also employee loyalty, with the resulting loss of productivity.
Increasing numbers of management-level executives are finding themselves in work environments that are more competitive and less supportive than before. Globalization of business and the movement away from conglomerates and toward core businesses has meant that companies are demanding more and better performance from their managers, and firing those that do not meet expectations. Managers are being given less and less time to show results. Corporate loyalty is no longer important. Extensive experience is not even always valued as highly as tangible achievements or a creative and flexible approach. Firms specializing in the recruitment of managers are increasing their business by as much as 35 per cent a year.
Seeing job insecurity as a problem is a failure to understand the risks inherent in the employer-employee relationship. The employee may not like the work, he may choose to go elsewhere with his skills, he may not be suited to the job for which he has been engaged. The employer may not be satisfied with the employee's contribution, he may invest in training or equipping the employee and then find that the investment is not as valuable as originally thought. These risks are divided between employer and employee.