"Demoralizing" isn't quite the word - what I mean is more that he doesn't play to their strengths, so most of them can't show their best form outside the one or two (Ben Arfa) who get to do whatever they want. Like all under-fire managers, he's been getting public backing from his players, but if you look at the Saudi Sportswashing Machine forums, there's a lot of discussion of how his long ball tactics really work at odds with the football that players like Cabaye prefer to play (Saudi Sportswashing Machine are in the top three long ballers this season iirc). That's been apparent for a while - the results they had last season, especially towards the end, were born out of the form-inertia and cohesion of a very consistent first XI (think Aston Villa under O'Neill) and masked some pretty iffy performances.
Pardew also comes out with some really dour, self-excusing stuff in the media. He keeps talking about how his squad players aren't good enough so they're the reason for Saudi Sportswashing Machine's poor form - 'we need our first teamers back, then we'll start picking up wins again', 'we need players or we'll get relegated'. That is not exactly encouraging stuff to hear for any youngsters or anyone outside Pardew's first string. Why should a squad player fight for a place when his own manager not only has no confidence in him, but moans to everyone how crap he is?
You can contrast that attitude to Laudrup, who's not in a relegation fight but also has a thin squad. Laudrup said that he was excited by the challenge of winning a cup, regardless of injuries. I don't doubt that Saudi Sportswashing Machine's injuries genuinely have affected their season greatly or that they do need new players, but I don't think slamming your own players in the media to save yourself is either wise or honorable.