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One of the techniques for downsizing is to create a toxic workplace. Of course with contracting it doesn't apply, but for regular employees, if quit you don't get unemployment payments, which keeps the company's unemployment insurance rates low. At the same time, everybody has to work harder to cover the absent employee's tasks. Fewer employees, higher productivity, lowers costs for the company.
Or they just don't want to go through the mess of letting people go.
Sounds like that might be what's going on.
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