It sounds like it was a combination of them still being civil servants (meaning they weren't eligible for severance pay) and management was doing everything they could to push them out while they were privatizing the company. Extremely bad doesn't begin to describe 2008-9 (https://en.wikipedia.org/wiki/Great_Recession)... there were no jobs being hired for in most sectors, in most countries during that time.
Seems like a gaping hole in worker protections of public sector employees were exempted from severance pay. What’s the reasoning? Is it really because they just cannot lose their jobs?
Yes, public servants are guaranteed a job for life, so they get neither severance pay nor unemployment if they “chose” to resign.
Nowadays they can ask for a 3-year pause (e.g. to create a startup, etc.) but those plans come from the “flexible economy” and were introduced only recently.