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The Impacts of Financial Crisis on the Progress of Employees - Research Proposal Example

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The paper analyses the impacts of the financial crisis on the progress of employees. The author tries to obtain a clear understanding of the financial crisis, establish what kind of relationship exists between the financial crisis and the progress of employees…
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The Impacts of Financial Crisis on the Progress of Employees
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Download file to see previous pages Financial crises can be used to refer to economic. An economic crisis refers to a situation where the economy is unstable and thus the instability results in an economic recession or a depression. An economic recession results from economic shocks thus leading to real changes in the economy, in the case of the financial crisis, it may not necessarily result in an economic crisis. There have been many financial crises with many of them resulting in economic recession to name but a few, the Mexican financial crisis which occurred in mid 1990, the Asian financial crisis in the late 1990s and the popular know global financial crisis in the late 2000s that saw giant economies like the United experience negative economic growth (Akhigbe 1985). The Mexican financial crisis occurred in the mid-’90s and to be exact in late 1994 and 1995, scholars have argued that the devaluation of the peso was mishandled thus resulting in the crisis. Mexico's economy was growing at an average of 3.1% between the years 1989 and 1994, inflation rates were decline and 1993 there was a single-digit after two decades of soar prices. This had made Mexico attractive to foreign investor thus making the capital inflows and foreign direct investment to spur the economy (Tuaño, 2002). The economic growth achieved was halted by the decision to devalue Peso in December 1994 was not attractive to the foreign investors, thus there no more capital inflows and this was the commencement of what was later came to be known as the great Mexican Peso crisis. In addition to devaluation weak regulators systems as contributed to the crisis, after the foreign investor pulled out the Mexican government did not measure in place that could avoid depletion of foreign reserves or reverse the imported created demand thus resulting in a crisis (Müller, 2011).
The Mexican crisis left employees vulnerable to high prices due to imported created inflation, these de-motivated employees used much of them to cover bills and purchase basic commodities. Although manufacturers could not request employees for a wage cut as suggested by many classical economists due to wage rigidity, the employers resulted in layoffs so as reduce the monthly bills or closing. In some cases, employers had closed down manufacturing plant as demand for their products was low, thus this led to many workers dream being shut down. The Mexican crisis was closely followed by the Asian financial crisis which can be contrasted to the earlier currency crisis to the crisis that had the most severe to Asian countries to name but a few Thailand and Philippines. The Asian financial crisis resulted in the main reasons as outlined below, shortage in foreign reserves, wrong replenishment measures by the International Monetary Fund and inadequate financial institutions. Similar to Mexico the Asian counties before the crisis the countries experienced high capital inflows but unlike in Mexican cases, foreign investors withdrew from Asia to some extent due to panic and contagion (Agénor, 2006).
Asian crisis also affected on employees, for example, in Philippines one of immediate reaction by companies operating in the region was to cut down the cost of production thus resulting to downsizing of the workforce or even at worst level closing down. ...Download file to see next pagesRead More
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