The corona pandemic has put businesses on pause, leading to unparalleled losses and impacting the livelihood of millions employed.
The OECD in its interim economic assessment has forecasted that global economic growth will be just 2.4% this year, down from 2.9% in 2019. The anticipated drop reflects the impact of the virus across sectors.
The worst-hit are the aviation, hospitality, tourism, manufacturing, and automobile sectors by the pandemic fallout. As per the Confederation of Indian Industry (CII), tourism and hospitality are worst hit and there might be a loss of 20 mn jobs unless the industry recovers by October this year.
Organizations in the aviation sector have already started laying off people. Recently, an online travel booking agency Expedia announced to lay off 3,000 employees globally. GoAir also has already laid off its expat pilots, introduced leave without pay for its employees, and announced pay cuts. Indigo, Goair, and Spicejet have cut salaries across the board. Nearly 600,000 contractual jobs are at risk, particularly in on-ground and support roles. With organizations laying off employees in the face of the spread of coronavirus that has crippled the economy, a spike in involuntary attrition is inevitable in the coming months.
As a result of this pandemic, Indian tourism and hospitality industry is looking at pan India bankruptcies, closure of businesses, and mass unemployment. According to estimates by hospitality consultancy Hotelivate, hotel chains in India are staring at a loss of $4.2 billion to $4.7 billion in revenues due to coronavirus outbreak. Loss to the organized market, which is about 5 percent of the total lodging sector in India, is estimated to range between $1.3 billion and $1.55 billion. This amounts to an erosion of 27-32 percent of the overall revenues as compared to the previous financial year.
The manufacturing and projects industry is also severely impacted. Key segments of Indian manufacturing have shuttled down in response to the lockdown orders. It has impacted production, losses in the form of inventory, reduced consumption, and impulse purchases. For instance, the handset manufacturing industry is in deep losses due to production delays as well as the loss of sales. Also, the shutdown in China has prohibited the import of various components affecting both Indian auto manufacturers and auto component industry. Even if the pandemic is curtailed, consumer sentiments are expected to be unfavorable and demand is expected to remain muted during H1 FY21 led by fluctuating and uncertain economic conditions. While large manufacturers have liquidity buffers and strong balance sheets to survive the headwinds to some extent till production normalizes, other companies will not be able to survive without intervention and support from the government, said ICRA Ratings.
The auto industry is also staring at losses around 13000 Cr due to lockdown, thereby impacting jobs at the dealer level, supplier level and field force level. The industry contributes around 7.5% to overall India’s GDP and thereby will have a spiral impact on the economy. China accounts for 27 percent of India's automotive part imports and major global auto part makers such as Robert Bosch GmbH, Valeo AS and ZF Friedrichshafen AG have factories located in the Hubei province. Owing to the closure of the factories of these companies has prohibited import of various components affecting both Indian auto manufacturers and auto component industry. It is estimated that there will be an overall revenue impact of at least $1.5 -2.0 bn per month across the industry.
As per Deloitte India’s 2020 Workforce and Increment Trends Survey, attrition at an all India level in the current fiscal year is about 15%. Involuntary attrition (layoffs, restructuring, etc.) has increased to 20% of the total attrition which will go up further.
That Coronavirus needs to be dealt with and lockdown is our only possibility of keeping safe. What can organizations do to curtail job losses and negative impact on employment. Because when the time comes, organizations will need all their resources to be motivated and aligned, and well bonded with the organization to hit the ground running and help business bounce back. Some insights from organizations who are not looking at layoffs but other means to meet the challenges of cash crunch include-
- Offering furlough or leave without pay to employees in a staggered manner
- Cutting down on all non-essential projects and developments at this stage
- Deferring bonus and other incentives
- Providing learning opportunities and team bonding using technology.
- Leveraging the current work from home situation to make it a sustainable model to be able to cut down on infrastructure and other related overheads
- Renegotiating with vendors, suppliers, partners to arrive at optimal contracts for a new reality.
Not to forget, this is the ideal time for employers to focus on developing and honing the professional skills of their employees, engaging them effectively, communicating with them regularly, motivating them, and supporting them during such tough times. This will work phenomenally in keeping employees productive and most importantly loyal to the organization in the long run.