COVID-19 Economic Impact On Employees


COVID-19 Economic Impact On Employees

With COVID-19 coming into the picture, the Indian economy is going through a major slowdown, which was evident over the recent quarters even before the crisis struck. In the third quarter of the current financial year, the economy grew at a six-year low rate of 4.7%. With all these problems hitting the world of work from multiple directions, companies are finding it difficult to sustain in this environment.

They are forced to take tough decisions such as cutting down the salaries, giving pink slips to employees and opting for other cost-cutting measures. The outbreak has presented new roadblocks for the Indian workforce and especially for the daily wage and contractual workers. And we are always here to support you for any job in any sector for temporary and permanent recruitment and staffing solution by the top manpower recruitment and staffing company in India.

Job loss is the most severe immediate impact of COVID-19 crisis while lower economic growth and rise in inequality would be the long-term effects, according to a survey by the Indian Society of Labor Economics (ISLE). The online survey was conducted on 520 ISLE members in the last week of May.

The preliminary results showed that loss of employment was considered as the most severe immediate impact of the crisis while lower economic growth and rise in inequality were probable long-term impact. Estimates of job loss showed that 80 per cent jobs were affected in urban economy, most of which were self-employed, 54 per cent jobs were affected in rural economy, most of which were casual employment.

Implications on the workforce

Job losses and salary cuts are likely in the high-risk services sector, including airlines, hotels, malls, multiplexes, restaurants, and retailers, which have seen a sharp, fall in demand due to lockdowns across the country. If the current global and domestic economic slowdown persists, it will impact demand and realization.

Undoubtedly, with this crisis impacting the business around the country, it will create very challenging situations for the workforce. Companies are not meeting the revenue targets hence, forcing employers to cut down their workforce. The World Travel & Tourism Council has predicted 50 million tourism jobs getting eliminated because of the pandemic. Not only the employees of multinational companies, but daily wage workers have been impacted the most during this crisis.

The International Labor Organization has called for urgent, large-scale and coordinated measures across three pillars – protecting workers in the workplace, stimulating the economy and employment, and supporting jobs and incomes. The International Labor Organization ILO estimated that globally more than 25 million jobs would be threatened due to the spread of coronavirus.
It is estimated that four out of five people (81 per cent) in the global workforce of 3.3 billion are currently affected by full or partial workplace closure. The UK, Canada and most of the European and Asian countries have begun to. The ILO, in its report, describes COVID-19 as the worst global crisis since World War II. The head of the the world faced the worst economic crisis since the Great Depression of the 1930s.

According to a preliminary assessment report, nearly 25 million jobs could be lost worldwide due to the coronavirus pandemic, but an internationally coordinated policy response can help lower the impact on global unemployment.

While on one hand, Indian employees are losing their jobs and receiving a salary cut, there is also an assumption that the majority of expats have gone back from India and they will take time to return. Different sectors such as automobile, banking and manufacturing employ a large number of expats. Indian companies need expats for several industry verticals and job functions such as after-sales services, business development and market audits.

Five Large Companies Announced Reduction

Five large companies in the consumer internet space in India have announced reduction of over 4,000 jobs over the last one month, on account of contraction in business due to Covid-19 led lockdown and the subsequent fall in demand.

On Tuesday, US-based cab-aggregator Uber announced it will lay off around 600 full time employees in the India-South Asia region, a majority of which are located in India, due to the impact of Covid-19 and the unpredictable nature of the recovery. The taxi hailing company said the layoffs were part of previously announced global job cuts. Last week, the firm’s parent company US-based Uber Technologies announced a 23 per cent reduction in its workforce.

In total, five companies – Uber India and South Asia, Ola, Zomato, Swiggy and have together announced the reduction of around 4,441 jobs in the last one month. The impact of Covid-19 and the unpredictable nature of the recovery has left Uber India South Asia with no choice but to reduce the size of its workforce. Around 600 full time positions across driver and rider support, as well as other functions, are being impacted. These reductions are part of previously announced global job cuts this month, said Pradeep Parameswaran, president, Uber India and South Asia. The number of laid off staff comprised about a fourth of Uber India and South Asia’s employee base.