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Uses and Limitations

Data on retrenchment are useful in the analysis of re-structuring or ailing industries.
 
The number of retrenched persons (flow) should not be confused with persons unemployed (stock). Not all retrenched persons will be unemployed as some will re-enter employment or leave the labour force. If the persons have not found a new job and are actively looking and available for work, they join the pool of unemployed.