Question

The global economy has seen significant changes since the banking crisis in 2008. Many economies have gone through large-scale austerity programs to reduce deficits. How has this affected the business organizational structure? How has employment and personal income been affected?

Answer 1

The global financial crisis was due to the collapse of US housing market known as the sub prime mortgage crisis. The collapse of the sub-prime mortgage market led to the event , however its origins goes back to the  1980s when the de-regulation of the US financial sectors took place. Financial products became more complex and consumers were unable to choose the right product and they suffered a full blown crisis after that.

Many economies have gone through large scale austerity programs to reduce deficits and this was done by bailouts to large banks and by increasing public spending, when the crisis happened many of the multinational organization stocks fell down to an all time low and their business was impacted leading to cut down in compensation of the executives and also cutting of jobs to keep running their business. There was massive unemployment after the crisis as many companies had to lay off employees to do cost cutting and run their business which also led to reduction of personal income of the job holders, the organizational structure was not changed and it remained the same only many high paying executives were asked to leave from the company

From an economic perspective there was shortage of money supply in the market and the governments increased public spending which as a result increased the money supply and got the economy to a better shape