The lockdown aimed at checkmating the COVID-19 pandemic is leading to huge job losses, pay cuts, and will see freezing of hiring throughout 2020. This will add to the already distressed employment story.
Some estimates have put the job losses at 10-12 million, across travel, tourism and hospitality sectors. The manufacturing sector, meanwhile, is banking on the pace at which the government lifts the lockdown, enabling a large number of worried population to return to work.
The Karnataka State IT/ITeS Employees Union had stated that some of the Information Technology (IT) companies, as well as those in the IT-enabled sector, have begun retrenchments and salary cuts.
“There is so much uncertainty in the air about salary and jobs. HR managers won’t face any trouble sending people home as most of us are already working from home,” said Girish Pal, a techie, with a sardonic laugh.
Some companies are said to be using this breathing time to build a pipeline. Many an IT firm is said to be on-boarding people ‘virtually’, even if some would only start work much later. This situation has also given rise to people having psychological issues such as anxiety and depression.
Consumer durables, automotive, auto components, white goods, capital goods, IT, startups, and MSME sectors will be among the worst hit. The IT sector, meanwhile, which employs over 4 million professionals is expected to witness job loss to the extent of 5%, according to T.V. Mohandas Pai, venture capitalist and former HR director, Infosys.
Despite Prime Minister Narendra Modi asking companies not to retrench people, many IT and ITeS firms have cut salaries and sacked people.
‘Flat economy’
The reason is not too far to seek. V. Balakrishanan, former CFO, Infosys, said: “India has lost straight $250 billion after a month-long lockdown. We are staring at a flat or negative economy. Demand compression has led to serious cash flow issues. Our SME sector employs 107 million people. Unless the government provides cash flow relief, pretty soon, things are going to be ugly. The U.S. has a $350 billion fund for SMEs, a grant to support salaries, and save jobs.”
Tougher competition
Former president of NASSCOM Chandrasekhar said that a prolonged lockdown may lead to job cuts in the IT industry. However, on a brighter note, he added that the work-from-home culture may become a positive development for the economy in the long run as it would open up new vistas of opportunities and save a lot of investments by IT firms.
He also said that startups surviving on venture capitalists may face tougher conditions if the present scenario worsens.
