Economic crisis, downsizing and “layoff survivor's syndrome”

Abstract

This article deals with layoff survivor's syndrome following the 1997 economic crisis in South Korea. South Korea has been credited with quickly recovering from its economic crisis by implementing policies aimed at economic restructuring. However, researchers have discovered that, in addition to those directly affected by a lay-off, layoff survivors as well suffer from impacts on their mental health — hence the name, layoff survivors' syndrome. The present research focuses on the socio-psychological impact of downsizing on layoff survivors on the basis of a nationwide survey. The findings reveal a significant difference in work attitudes after downsizing, as well as a significant impact on survivors' mental health. The study concludes that these negative impacts may negatively influence organizational productivity, and thus downsizing as a blanket strategy for organizational renewal needs to be reconsidered.