Business continuity and managing costs has been a key concern for leaders across sectors and scale amid COVID-19 crisis. The pandemic and the subsequent lockdown in India has worsened the financial stress for businesses and now to be able to get their business back on track, some of them might cut jobs.
As per the latest survey by All India Manufacturers Organisation (AIMO), over 70 percent of micro, small and medium enterprises (MSMEs) and 40 percent corporates intend to cut back on their workforce in order to get their business back on track.
On the issues likely to be faced during the Unlock 1.0 period which began this week, the survey covered various aspects such as visibility of demand, collection of pending dues, raw materials, future EMI payments along with present interest burden and salary issues.
K E Raghunathan, immediate past president, AIMO said, “The extent of the job loss will be more clearer by the end of August’20 , as most of the respondents were in process of gauging how many of their labour will return and also they are currently gauging the optimum employee strength required to sustain their business in the near future.”
Among those who were surveyed, 36 percent of self-employed shared that their biggest concern is their ability to pay EMIs as they had issues with pending collections for work done earlier and also the receipt of new orders and profitable prices for the business. On the other hand, the corporates had manpower concerns, raw materials sourcing and price management, and demand in terms of new orders dominating their set of challenges for the next three months.
While some experts suggest that layoffs negatively affect the long term growth of the company, currently, it seems to appear as the only option for MSMEs to sustain their business. The lockdown has been there for about three months now and the pandemic is expected to have a long term negative impact on consumer spending. These small businesses are only left with tough choices to make. But even they have to be mindful that it is the key talent that can also help them bounce back. So if they really need to cut jobs, they must look at identifying the key roles and redistributing the workforce wisely.