As an HR leader, my primary responsibility is ensuring the well-being and engagement of our employees, coupled with partnering with business partners to ensure the end business objective is achieved. In today’s rapidly shifting economic landscape, this responsibility has become more critical—and more challenging—than ever before. The global economy is facing considerable headwinds: inflation, supply chain disruptions, geopolitical conflicts, and rising interest rates. These challenges have created a climate of uncertainty that is directly impacting employee morale.
In fact, recent studies reflect this growing sense of unease. A 2023 survey reported that nearly 45% of employees expressed concern about layoffs in their industry—a marked increase compared to previous years. In tech-heavy industries, where layoffs have been widespread, this fear is particularly prevalent. But across all sectors, employees are understandably worried. Even those in more stable fields like healthcare and education have voiced concerns as organisations across industries are adjusting to new economic realities.
Why Economic Pressures Are Impacting Job Security?
There are a few key factors driving this heightened sense of job insecurity. First and foremost is inflation. The sharp rise in the cost of goods and services has had a ripple effect on businesses. Many organisations are facing squeezed profit margins and are looking for ways to reduce expenses, often through hiring freezes, budget cuts, or restructuring. A report from the World Economic Forum noted that in 2023, inflation drove a significant decline in consumer spending, especially in industries like retail and hospitality, forcing many companies to take drastic measures to stay afloat.
Rising interest rates are another contributing factor. With borrowing costs at their highest levels in over two decades, businesses that rely on debt to fund operations or expansion are feeling the strain. This financial pressure has led some organisations to re-evaluate their workforce needs. And, of course, we’ve seen the result in the tech sector, where major companies have collectively laid off employees in response to declining revenues and market shifts.
For employees, witnessing layoffs in large, well-established companies can be a stark reminder of how vulnerable jobs can be in the face of economic forces. According to a global 2024 survey, 63% of employees in industries like tech and finance reported fear of losing their jobs, compared to 52% the year before. This anxiety isn’t contained to any one industry; it’s widespread across sectors and geographical locations.
How Job Insecurity Affects Employees?
From an HR perspective, one of the things that keeps me up at night is how job insecurity impacts not only the workforce but also the overall organisational culture. When employees feel uncertain about their future, it takes a serious toll on their well-being and performance. Research from the American Psychological Association shows that job insecurity can lead to increased stress, anxiety, and even depression. We’ve all seen the effect stress has on performance: employees become less productive, morale declines, and creativity suffers.
Moreover, when people are worried about their jobs, they often become less engaged. Why would anyone fully invest in their current role when they’re preoccupied with finding a backup plan or new employment? We’ve seen that job insecurity can lead to higher turnover, lower loyalty, and even disrupt collaboration within teams. This is particularly concerning because, in times of economic uncertainty, what organisations need most is a united, resilient workforce pulling together.
How We Can Support Employees?
As HR leaders, it is our responsibility to address these fears head-on. One of the most important things we can do is communicate openly and frequently. Transparency is key. If employees feel left in the dark, their anxiety only grows. Sharing what we know about the company’s financial health, strategic plans, and any potential risks will build trust. Of course, we don’t always have all the answers, but being upfront and honest with employees goes a long way in easing concerns.
We can also focus on career development and upskilling in future disruptive technologies like AI, etc. When employees are equipped with the skills to adapt to changing conditions, they are more likely to feel secure in their roles. Upskilling and reskilling efforts show employees that we are invested in their long-term career success, not just in the immediate demands of the business. A 2023 LinkedIn survey found that 94% of employees would stay longer with a company that actively invested in their career growth—a statistic that speaks volumes about how meaningful these initiatives can be.\
Finally, we must not overlook the mental health impacts of job insecurity. Offering resources such as Employee Assistance Programs (EAPs), mental health counselling, and stress management tools can make a significant difference in how employees cope with uncertainty. We need to prioritise their mental well-being, ensuring they know they are supported, not just as workers but as people.
Looking Ahead
These are challenging times, and the road ahead is filled with uncertainty. But it’s during moments like these that our roles as HR leaders are most critical. We have the ability—and the obligation—to support our employees through the storm. By fostering a culture of transparency, offering opportunities for growth, and providing emotional and mental health resources, we can help reduce the anxiety that so many employees are feeling.
At the end of the day, our people are the most valuable asset we have. They are the foundation upon which our organisations are built. If we can support them effectively through this period of economic turbulence by connecting people with purpose, we’ll emerge stronger, more resilient, and better prepared for the future—together.
(The authored has been curated exclusively for BW People publication by Deo Kumar, Director and Head of HR, Knauf India Private Limited)
