A federation of MSMEs, AIMO in collaboration with seven other industry associations, surveyed over 46,000 companies across India and found that the pandemic’s impact on their businesses will lead to massive job loss
At least 72% of the micro, small and medium enterprises will reduce the employee count, the All India Manufacturing Organization (AIMO) said in a fresh survey underscoring the magnitude of job loss the Indian labour market is going to face due to the covid-19 and the ensuing lockdown.
A federation of MSMEs, AIMO in collaboration with seven other industry associations, surveyed over 46,000 companies across India and found that the pandemic’s impact on their businesses will lead to massive job loss. The country is facing a high unemployment rate both at rural and urban India and this survey points to the growing pain the working class is set to face.
“We received 46,525 responses for our survey. The most striking aspect was that 72% of MSMEs, 42% of the corporate respondents said that they will definitely reduce their head count to get their business back on track," said K.E. Raghunathan, past president of the AIMO and an active member of the survey said.
“In fact only less than 20% of the all the categories said they would continue with the same headcount. The extent of the job loss will be clearer by the end of August 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," Raghunathan said.
Among MSMEs, while 72% said that they will reduce employee count, 14% said there will be no reduction and another 14% were uncertain. Among the bigger corporate respondents, 42% said there will be a lay off and 18% asserted that they won’t reduce employee count and rest 40% were uncertain at this point of time.
India’s MSME sector is a big job creator in the labour market, and employees around 110 million people. And impact on their businesses has direct relation with job loss. According to Centre for monitoring of Indian Economy, unemployment rate in urban India was 25% and in rural India it was almost 18% in the week ended 31 May.
AIMO said issues like demand forecast, collection of pending dues, raw materials, future EMI payments along with present Interest burden and salary issues were the key concern of the companies. AIMO has been saying that they need money, manpower and raw material at reasonable costs for their quick revival.
AIMO treasurer Radhakrishnan said most of the MSME entrepreneurs are in a precarious situation and their situation won’t improve till the demand in the market returns. He said the job market has also tanked with most companies freezing their recruitments in the near term.
“Unless new business opportunities and demand crop up, unless people reskill or upskill, the new normal will be a difficult market place," Raghunathan added.
He further said that one of the prominent suggestion they received from MSME entrepreneurs is that they should be facilitated to get raw materials by the governments through a PDS like mechanism under the supervision of National Small Industries Corporation on credit and reasonable price immediately and “also allow banks to accept bill discounting facility for all sales invoices raised in the next 3 months, irrespective of the party being billed".
The union government on Monday announced a set of measures for MSMEs including approval for a ₹50,000 crore equity infusion into MSMEs through Fund of Funds, and an additional ₹20,000 crore for a distressed asset fund for the sector.
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