Over the past two years, the world has witnessed massive layoffs, such as the great tech reset of 2024, and current times are also casting uncertainties over the international development sector too. Recently, two major international non-profits, Save the Children International and the International Rescue Committee, each announced lay-offs of up to 500 employees. UN agencies are also cutting positions, particularly in offices dealing with the Ukrainian humanitarian crisis. What’s going on, and why? Could this mean fewer opportunities in the sector or simply a reallocation of funds to other areas? Check out some insights below.
Key Takeaways:
- Many NGOs, like Save the Children and the International Rescue Committee, are facing budgetary constraints due to reduced unrestricted funding, rising operational costs, and inflation, leading to significant layoffs.
- Experts mention that governments are prioritizing defense spending over humanitarian aid due to global conflicts.
- According to the experts, these layoffs could also trigger a wider trend, with other organizations also reducing their staff.
DevelopmentAid: What are the causes of the layoffs and staff cuts in the development sector?
“From my point of view, the layoffs and staff cuts in organizations like the International Rescue Committee and Save the Children stem from a combination of financial pressures and shifting priorities. A significant factor is the reduction in unrestricted revenue, which organizations rely on for critical costs like staffing. Rising operational expenses, inflation, and economic instability have added to the strain, making it difficult for these NGOs to sustain their previous workforce levels. Additionally, as states rearm their war arsenals in response to global geopolitical tensions, such as the conflict in Ukraine, governments are prioritizing defense spending over humanitarian aid. This shift in budget priorities could result in less funding for international organizations that focus on development and crisis response.”
“The recent layoffs and staff cuts at organizations like the International Rescue Committee and Save the Children International can be attributed to several interrelated factors:
- Financial constraints: Despite substantial revenues, many NGOs and INGOs operate with tight budgets, especially when a portion of their funding comes from unrestricted sources. Economic uncertainties, fluctuations in donor funding and increased operational costs can lead to financial strain, prompting organizations to reassess their workforce.
- Increased operational costs: The rising costs of delivering services, particularly in crisis-affected areas, can strain budgets. For example, the ongoing humanitarian crisis in Ukraine has redirected resources, necessitating budgetary adjustments elsewhere, leading to job cuts in other regions.
- Shifts in funding priorities: Donor priorities can shift, impacting the funding streams for various programs. If unrestricted funding decreases or if donors prioritize specific projects, organizations may need to reduce their workforce to align with the available resources.
- Maximizing efficiency: Organizations may also be seeking ways to streamline operations and increase efficiency. This could involve consolidating roles or eliminating positions that are deemed to be redundant, especially in administrative functions.”
DevelopmentAid: What are the odds of a massive staff cut in other aid organizations agencies/NGOs and INGOs? Argue your position.
“These layoffs could mark the beginning of a broader trend affecting other international development agencies, NGOs, and INGOs. Many of these organizations are highly dependent on donor funding, which is often unpredictable and vulnerable to changes in global economic and political climates. As inflation rises and governments tighten budgets, more organizations may face financial constraints that force them to reduce staff or downsize programs. The reallocation of resources toward military expenditures further exacerbates this issue, limiting the financial support available for humanitarian efforts. That said, not all organizations will be equally impacted. Those with diverse funding streams or stronger financial reserves might be better able to absorb the shocks and avoid major layoffs. Still, given the current economic landscape and the prioritization of military spending, it’s likely we’ll see more organizations in the sector making difficult decisions about staffing in the months ahead.”
“As for whether this trend will lead to massive staff cuts in other international development agencies, several arguments can be made:
- Potential for widespread cuts: If the financial pressures and funding recalibrations persist, other organizations may follow suit, particularly those that are heavily reliant on unrestricted funding. The economic landscape could compel many to reconsider their staffing needs, leading to a ripple effect across the sector.
- Sector resilience: On the other hand, some organizations may be better positioned to weather such financial storms due to diversified funding sources or robust financial management strategies. They might prioritize retaining staff to maintain operational capacity, especially in critical areas of need.
- Evolving landscape: The international development sector is evolving, with increasing emphasis on accountability and effectiveness. This might lead organizations to rethink their staffing models and adapt to changing conditions rather than resorting to mass layoffs.
In conclusion, while the layoffs at major NGOs and INGOs signal a troubling trend, the extent to which this will lead to widespread staff cuts across the sector will largely depend on individual organizations’ financial health, funding dynamics, and strategic responses to the current challenges.” (Menelic Le Semeur, Administrative and Finance Coordinator)
See also: Will mandatory “return-to-office” improve employee performance or vice versa? | Experts’ Opinions
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