Layoffs, also called downsizing, are mass terminations of employees because of a lack of work.
Layoffs pose a significant risk to Lean and other continuous improvement efforts. If employees get the idea that helping make improvements will cost them their jobs, then they will not want to make things better.
Lean requires an agreement, formal or informal, that improvements will not result in people losing their jobs. This can be especially hard to do in poor economic climates.
In bad economic times, sometimes it is all a leader can do to save a company. In better times, though, layoffs should be avoided at all costs.