> or do you mean that previously there was room for slackers as long as they didn't care about promotion, and the difference now is their jobs are at risk?

Yes, I think they collected lots of mediocre employees through the aggressive hiring.

Also, some of them may be not productive by common metrics (say bugs closed, lines of code implemented), others are good at those metrics, but produce high quantity/low quality work, and make more damage than impact: systems are overengineered, buggy, etc. I think second type is likely makes companies suffer much more than first one, they are much harder to trace and fire.