I think what they mean is that morally, people need to take care of themselves. After four months, a past employer shouldn't still be on the hook for taking care of a person.
The past employer has new employees and that money needs to go to them.
If they're cutting staff at that quantity it's almost certainly to save money, and the money saved from laying off employees shouldn't be going towards funding new hires.
The past employer has new employees and that money needs to go to them.