Article: Unemployment and hiring trends during COVID-19


Unemployment and hiring trends during COVID-19

COVID-19 leads to freezing hiring and delay in joining dates. Let's see how the pandemic is impacting the employment and hiring across the industries.
Unemployment and hiring trends during COVID-19

People around the world are increasingly worried about how they are going to pay their bills as coronavirus forces businesses to close and costs millions of jobs. United Nations has estimated a job loss of five-25 Mn. Additionally; the International Labor Organization (ILO) stated the world would lose $860 Bn to $34 Tr in labor income.

This is no longer only a global health crisis, it is also a major labor market and economic crisis that is having a huge impact on people. - ILO Director-General, Guy Ryder

The surge in jobless claims is being fueled by the growing number of companies, including Marriott, Macy's and GE that have announced layoffs or furloughs as they try to weather the economic storm caused by the pandemic. 

Here are some top hiring trends we are observing during the ongoing pandemic:

Industries experiencing major ramification

  • Airlines And Airport Operators 

The aviation sector is already fleecing with IndiGo announcing a salary cut for its employees. Besides that GoAir has already retrenched many of its expat pilots. If things do not improve we can expect huge job cuts in the aviation sector. Many of the airline companies take aircraft on lease and have to pay regular money to the leasing companies irrespective of whether they fly or keep these aircraft grounded. All this will put extra pressure on the aviation companies and they will be forced to sack people. It is also contemplating salary cuts and a voluntary no-pay leave scheme up to certain management positions. Given these conditions, airline including global companies like Singapore Airlines, United Airlines have suspended all their hiring till at least June.

  • Travel, Tourism & Hospitality 

A large percentage of total tourism business activity of India, which is estimated at $28 billion-plus in forex and upwards of Rs 2 lakh crore in domestic tourism activity, will be at economic risk throughout the year.

Indian tourism and hospitality industry is staring at a potential job loss of around 3.8 crore, which is around 70 percent of the total workforce, due to the Covid-19 impact.

COVID-19 effect is such that it can lead to severe to very severe impact on the travel and tourism sector in India with thousands of jobs being axed. “In India many hotels both luxury and budget are running at just 10 percent of occupancy levels as thousands of people have canceled their trips. This may further worsen in the times to come at least till end of this year. For instance, Airbnb announced its guests could cancel their reservations for a full refund. This step would have hurt the company very much.

Travel firm MakeMyTrip has announced salary cuts as the tourism sector has taken a massive hit due to the coronavirus outbreak. MakeMyTrip founder Deep Kalra said that the pay cut will happen across top and managerial levels of the company. Moreover, the salary cut has been done across MakeMyTrip (MMT) Limited subsidiaries - Goibibo and redBus. Besides, the company might also lay off about 400 employees who are not on its payroll. "MakeMyTrip has about 650 people employed for backend and support services. It has plans to fire 60 percent of its total headcounts in these departments," Entrackr quoted an anonymous source.

Slowdown in hiring

According to industry experts, the overall hiring sentiments is likely to witness with 60-65 percent interviews getting delayed especially in service sectors. Sectors like BFSI, Retail, and Logistics, where a lot of frontline hiring takes place are likely to witness delay.

C -suite hiring has fallen by 50 percent following the COVID-19 outbreak and this is far worse than what was witnessed during the 2008-09 global financial crisis, said headhunters. The worst affected has been the hiring of expatriates, they said.

According to an executive hiring company, “Growth-related appointments at companies have come off by up to 50-60 percent. Companies have communicated to them that there is a freeze on leadership hiring for the next six months. So much so that if an offer has been made but the candidate has not resigned (from their present companies), it should be revoked.”

B-schools internship and final placements on hold

The summer internship season that would have ideally begun in April has now either been deferred to late April or has gone remote/virtual amid the COVID-19 (coronavirus) scare at some of the top B-schools.

For instance, nine have seen internship cancellation by three companies at Indian Institute of Management (IIM) Lucknow. On the other hand, students at other B-schools like IIM Ahmedabad, IIM Kozhikode, IIM Indore, FMS Delhi and XLRI Xavier Institute of Management have been issued deferred joining dates or have been asked to work remotely. While domestic internships have been relatively less impacted, international internship projects stand canceled with internship periods reduced from typically 7-8 weeks to 5 weeks now, depending on when the lockdown ends.

However, final placement joining dates, which usually fall in May or June, are yet to see much impact except deferment in some cases. Yet, few LinkedIn posts are doing rounds around consulting companies that have revoked the final placement offers.

Industries experience surge in hiring and labor shortage

This swift change in businesses’ daily operations due to ongoing pandemic doesn’t have to mean, “no one is hiring.” In fact, no matter what economy we’re in, one thing is always certain: there are still companies hiring, some are even increasing their need for new employees.

Online groceries like BigBasket, and e-commerce companies like Amazon, Flipkart are hiring on-ground staff has been the biggest challenge after migrant workers fled to their native places from various states due to lockdown.

It is reported that e-commerce companies experience about 80-90 percent labor shortage.

Dependence on technology

Virtual career fairs and events, fully remote recruiting, more personalized career paths, and greater insights into candidate experiences are quickly becoming the new normal in a post-COVID-19 world. The COVID-19 pandemic is quickly changing how every organization is attracting, recruiting, and retaining employees on their virtual teams, making remote work the new normal. 

Regulatory framework around deferring joining letters and layoffs

  • Are advisories with respect to the non-termination of employees binding or not?

The said advisories are in the nature of guidelines and are not binding on the employers. However, the MHA order issued on March 29, 2020 has been issued under section 10 (2) of the Disaster Management Act, 2005 for payment of wages on the due date without any deduction, is binding.

  • Can an employer terminate/retrench its employees?

The employers may terminate/retrench their employees in accordance with the applicable rules. However, until the nationwide lockdown remains in effect, the Government of India has directed all the employers to pay the wages to their workers on the due date without any deduction. 

  • What are some of the remedies if an employee is terminated/retrenched?

For an employee who falls under the category of a ‘workman1’, their conditions of service are governed by the Industrial Dispute Act, 1947 (‘Act’).  Section 2A of the Act provides that dismissal of an individual workman will be deemed to be an industrial dispute.

The dispute can be settled by way of conciliation or by adjudication. In case the matter is settled by way of conciliation, a settlement is arrived between the employer and employee, and dispute comes to an end.

In case the dispute is not settled, the dispute is referred to adjudication. The process of adjudication is as follows:

The dispute is referred to as the Grievance Settlement Authority. In case the decision of Grievance Settlement Authority is not acceptable to the employer and/or the workmen, the appropriate government, by an order in writing, refers2 the dispute for adjudication to:

  • Board of Conciliation
  • Court for enquiry
  • Labour Court (if dispute pertains to matters specified in Second Schedule)

Tribunal (if dispute pertains to matters specified in Second or the third Schedule)

In case the employer and the workmen agree to refer the industrial dispute to arbitration, at any time before the industrial dispute has been referred under Section 10 of the Act to a Labour Court or Tribunal or National Tribunal.

For an employee who is a non-workman, their conditions of service are governed by the letter of appointment/ employment contract, issued by the employer and the Indian Contract Act, 1872 and the State-Specific Shops and Establishment Legislations as well as the various orders that have been issued by various departments of central and state governments during the lockdown. A non-workman may approach the civil court and/or the court designated under the Shops and Establishments legislation seeking payment of any unpaid dues and/or damages for wrongful termination if the termination was against the terms agreed by the employer.


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Topics: Recruitment, #COVID-19

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