Q.Give reasons for Labour retrenchment at present situation.

Workers are retrenched today mainly because of falling demand/recession, automation, cost-cutting during losses, and surplus staff after restructuring.

In the Tamil Nadu HSC Class-12 Economics syllabus (Theories of Employment and Income), retrenchment means the termination of workers by an employer for reasons other than misconduct, chiefly to reduce costs. The main reasons in the present situation are:

1. Fall in demand / recession — when demand for goods falls (as during an economic slowdown or the pandemic), firms cut production and no longer need as many workers.
2. Automation and technology — increasing use of machines, computers and labour-saving technology reduces the need for human labour.
3. Losses and cost-cutting — firms facing losses or trying to cut costs downsize their workforce; some units close down entirely. …