But it destroys loyalty, and they will leave at the first opportunity, which will happen sooner or later. It does not sound good as a longer-term strategy.

Every employer of note across tech is behaving in pretty much the same manner right now. There's no point holding a grudge over this if the alternative is working at... Anywhere else, that treated its people just as poorly this year.

The more plausible risk is people mentally checking out, and not giving much of a crap about their work.