Don't fire, says PM. But where's the money to pay wages, asks industry

Despite Prime Minister Narendra Modi asking companies not to lay off staff, employers across sectors have already started cutting their manpower.

Companies in sectors such as IT, aviation, travel, media and events management have already handed out the pink slips to hundreds of employees.

This is the second time that the Prime Minister has requested the companies to refrain from firing employees. In his March 19 address too, he had made the point.

But on their part, the companies argue that they are struggling to manage the wage bill, especially in the absence of direct economic help from the government.

"We have a monthly wage bill of about Rs 20 crore. Now we haven't produced anything for a month. If this goes on for a month more, how are we supposed to pay salaries," a senior executive from a manufacturing company told Moneycontrol. 

So which sectors have already laid off people?

Aviation: GoAir and SpiceJet have terminated contracts of their expat pilots. Other airlines have cut pay and asked a large portion of their staff to go on leave without pay. Air Deccan has put its staff on sabbatical without pay.

IT/ITeS sector:  Gurgaon-based BPO firm Fareportal laid off over 300 employees. A Pune-based IT firm has laid-off a dozen workers. According to industry estimates, close to 1.5 lakh techies could be out of job in the next 3-6 months. The sector employs about 45-50 lakh people, with the top four players accounting for about 10 lakh of the total workforce.

In the case of BPO, which employs 11 lakh people, close to 30-35 percent of the workforce is expected to let go of the job. The sector saw close to 50 percent of the population interrupted due to COVID-19.

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Event management: With events across the country getting cancelled due to the lockdown, a large portion of the employees now find themselves without jobs. Due to halt on production, daily wagers like makeup artists, technicians, spots are all out of jobs. The sector provides employment to around 10 million people directly and 50 million indirectly.

Apart from these sectors, daily wagers and contractual staff across sectors have been off work for nearly a month now. The country saw a mass exodus of migrant labourers from cities, and many of them said their employers have laid them off.

Many sectors had managed to hold on till now, but had warned that if there was no help coming from the government, then layoffs are imminent. These sectors include retail and textile. Overall, retailers may have to let go 20 percent of their employees.

Government help

Many of the companies are now looking forward to the guidelines that will be released on April 15, hoping that in parts, the lockdown may be eased. And they are also hoping for economic help.

I hope we get some details of a stimulus package tomorrow.

Telling industry not to lay off is fine in speeches, but the government has to pay for it.

— Deepak Shenoy (@deepakshenoy) April 14, 2020

 

"PM may have appealed to not lay off people, but where is the cash," said Mohandas Pai, the former Infosys director and Chairman of Manipal Global, said in an interview.

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