Citizens in India are concerned over increasing jobs losses and large layoffs across the country, which is going through a deep economic crisis in the wake of Covid-19 pandemic.
Over the past few weeks, the world has seen millions of job losses as economies around the globe falter due to massive economic disruptions triggered by the spread of the deadly virus.
India, too, has been affected by significant jobs losses across sectors, especially Medium and Small-Scale Enterprises (MSMEs), which has been likened to the backbone of most upfront sectors.
As the economic situation in the country looks bleak, the government and corporate India is working round the clock to ensure jobs losses are minimised.
India Today TV’s Rahul Kanwal spoke to top industry experts to get clarity on how companies can avoid layoffs if the situation takes time to fully normalise.
Chandrajit Banerjee, CII Director-General, said during the discussion that corporate India and government need to work together to save jobs at the moment.
“SMEs face the biggest challenge. Jobs losses will be much more in smaller firms. Larger companies will be able to see the crisis through for a longer period,” Banerjee said.
He, however, added that it would gradually become difficult for large companies to sustain jobs if the situation does not improve.
Banerjee said a “different kind of stimulus” is required in India at the moment. It requires a two-fold approach — 1) Fiscal expansion directed towards the bottom of the pyramid and 2) One is enhanced credit to industries through banks.
He said overall financial support of 2 per cent of the GDP is required at the moment to help small enterprises.
The CII Director-General added that the government should also be prudent in its relief measures and added that it should spread the relief package nicely to cover all industries deeply affected by the Covid-19 crisis.
“Biggest job issue will be faced by the MSME sector. And that’s the biggest stress. All such enterprises should be given additional loan limit for three months for their wage payroll,” Banerjee said.
“Reconstruction in term loans should be provided to SMEs as well with an interest suspension of five per cent. We really need to be very calibrated in our approach. We need the economic package for revival to be very very prudent and to navigate through this challenge that we might face on job losses,” Banerjee added.
Deep Kalra, MakeMyTrip co-founder and CEO, who represented the travel and tourism industry during the discussion, said the sector faces the biggest challenge among all others.
While there have been no layoffs at MakeMyTrip, all senior management have taken deep pay cuts while Karla has taken a 100 per cent pay cut along with the other co-founder.
Kalra’s method has been applied by several companies who have taken pay cuts to keep everyone on the payroll.
“The best thing to do right now is to take pay cuts at senior levels. My co-founder and I have taken 100 per cent cuts. We announced that three weeks ago. The leadership team has taken 50 per cent cuts and down the line, we have gone to manager level with 10 per cent cuts,” Kalra said.
“I think the idea is to brace for the worse. Let’s lessen the overall burden so that we don’t have to lay off people. It would have been really hard at this point for them,” he added.
Kalra also asked the government for a relief package for the entire industry as the broader sector has let go of thousands of employees.
Ajay Bijli, PVR Chairman, agrees with Karla. He also said the leisure and entertainment industry is keenly awaiting some form of support from the government.
“It will be wonderful if they (government) give us some relief package to make sure the industry doesn’t go down. Senior people have taken a 50 per cent cut. No one has been asked to leave,” he said.
“But if look at overall industry, the situation is bad,” he added.
Bijli recommended soft loans and longer moratoriums on term loans for the broader sector which is linked to real estate, the entertainment industry and more.
AD Singh, Founder and MD Olive Group of Restaurants, was also of the view that the government should provide a relief package of some sort to help the industry which has suffered equally as the larger tourism and travel sector.
He, however, said that the situation is very difficult for the sector at the moment and they are assisting employees and process various contributions like EPF and ESIC.
Suresh Narayanan, Chairman and Managing Director of Nestle, who represented views of the FMCG sector said, “It is fair to say we are going through a crisis that has never been experienced before.”
While the industry is facing lesser losses compared to other industries, Narayanan clarified that many aspects of business within the sector have been affected by the lockdown.
These glitches have also led to some pay cuts in the broader sector and there have been job losses as well. However, he feels that the situation will improve after the restrictions are eased after April 20.
He said the industry needs to be humble at the time and should not terminate employees. Rather they should go for pay cuts as it would not amount of job loss, which also adds mental pressure.
Last but not the least, Vikram Kirloskar, CII President and Vice-Chairperson of Toyota Kirloskar Motors, and Maruti Suzuki Chairman RC Bhargava gave their views on how to minimise job losses.
Both mentioned that additional government aid is necessary during the crisis but added that companies will also have to plan for the future. Both felt that it would be better to start the business when the Covid-19 dust completely settles rather than starting off now.
Kirloskar said, “Businesses which are opening in the first phase are items which are relatively easy to open up and which are required to improve the quality of everyday life including giving jobs to daily wage labourers.”
“It is up to us to make it successful. I am happy PM Modi moved the lockdown point further ahead. I don’t want to have a restart and again have a shutdown in two months. I think that will be worse,” he said.
“I rather have a safer restart where we gradually open up.”
Commenting on the future of the auto industry, he said things are still going to be difficult for a while.
“For the auto industry, it is still going to be difficult. The big dealers and component makers are also in the red zones and you need the entire supply chain to work efficiently,” he said.
“The only way the economy can really restart going is if people spend money and the money circulates in the economy. Of course, a government stimulus package is needed. We hear some of it is going to come through. The size of it, I really do not know. I can’t say, hope it is big.”
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