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Layoffs Season: 10 million & Counting….that’s the no.of jobs lost due to COVID’s impact

As we hear more about layoffs across several industries, here’s a peek into how COVID-19 has impacted employment across India. The second-biggest impact of the Coronavirus outbreak in India after the toll on health has been the loss of employment. Data compiled by Moneycontrol, based on industry estimates, showed that 10.8 million jobs have been lost across sectors since the March 25th lockdown.

This is the worst-ever level of job losses estimated to have hit India after liberalisation. Even the 2007-2009 financial crisis had a relatively smaller impact, with about 5 million jobs lost by salaried workers across India.
 
The data compiled showed that the loss of jobs was across traditional sectors such as travel/tourism and hospitality, which rely on people movement to sustain business, as well as startups and financial services.
 
Travel and tourism
 
The travel and tourism sector is among the worst hit by the pandemic. Industry sources said that 5.5 million jobs have been lost in this profession so far, with the worst hit being travel agents and tour guides.
 
It is estimated that 20 million people work in the travel and tourism industry. The job roles involve sales, marketing, planning itineraries, customer service and on-ground tour guide services. Sources said that travel companies that also handle flight and hotel bookings are relatively better off than standalone, pure-play travel companies.
 
Around 15 percent of the 20,000 travel desk roles in corporates have also been cut as companies resort to remote meetings to cut costs.
 
Hospitality sector
 
When hotels and restaurants across the country were ordered to shut from mid-March, initial estimates suggested that 70,000-100,000 jobs were in danger.
 
Cut to August, industry estimates suggest that 3.8 million jobs have been lost in the sector. Mid-to-small size eateries are the worst hit since they do not have the infrastructure to offer online ordering or home delivery.
 
In Mumbai itself, close to 60 eateries have shut down permanently so far. Niche restaurant Mirchi & Mime in Powai, Mumbai, which had hired hearing-challenged staff through tie-ups with local non-governmental organisations, announced its permanent closure last month. It’s not just eateries but also hotels that are facing challenges. 
 
While travel has resumed and hotel stays have been allowed from July onwards, guests have remained cautious. Further, no outsider is allowed to dine in restaurants inside hotels. Hotels have reported a 45.3 percent decline in their revenue-per-available room in the January to June period from a year ago, according to JLL’s Hotel Momentum India.
 
Hotels have also fired staff, including guest relations and room service personnel. The Indian hospitality industry market size is estimated to be $10 billion and it is said to employ 35 million people.
 
Aviation
 
A direct consequence of flight operations being shut from March 25 due to the lockdown was the revenue hit taken by airline companies. The revenue impact is still being felt despite domestic flights resuming, air bubbles being created for international travel, and the Vande Bharat Mission leading to resumption of some international flight services.
 
IndiGo, India’s largest airline by market-share, said in July that it would let go of 10 percent of its workforce to offset the decline in revenues in the wake of the pandemic. As of March 2019, IndiGo had 23,531 employees.
 
Similarly, it was reported earlier that GoAir is terminating the contracts of its expat pilots to cut costs and see through the disruption caused by the coronavirus pandemic in the aviation industry.
 
While the aviation industry has an estimated 100,000 direct employees, the exact job loss estimates are not yet available.
 
Automobile & transport sector
 
While traditional automobile companies have avoided layoffs, HR consultants said that auto component makers have initiated job cuts due to falling demand for goods.
 
The transportation sector has related jobs, including those for commercial drivers of trucks, autorickshaws, buses and taxis. With travel restricted and remote working being opted for by companies, almost 990,000 such workers are out of jobs.
In fact, the Bus & Car Operators Confederation of India (BOCI) & School Bus Owners Association have sought financial relief from the Maharashtra government amidst the lockdown. BOCI said that 1,50,000 bus staffers are currently in financial distress as they have lost their jobs due to Covid-19.
 
Retail sector
 
The retail sector, which includes high-street fashion as well as small stores, employs about 6 million people across India. In June, the Retail Association of India had estimated that a significant number of employees working in India’s modern retail sector could likely lose their jobs in the subsequent four months if the government did not intervene. 
 
The association had said that small retailers are expecting to lay off 30 percent of their manpower. In places such as Maharashtra, while malls have opened, footfalls remain low due to virus concerns and low spending ability amid pay cuts. 
 
Overall, job cuts in the retail sector are estimated to be 200,000. This includes 20 percent of workers who have gone back home and are unwilling to return.
 
IT sector
 
While it has been affected relatively less than traditional sectors, the IT sector has let go off about 1,50,000 jobs so far, according to industry estimates. This includes traditional client-facing roles, where projects have been called off/new projects have dried out as well as BPO jobs.
 
With remote working being implemented, BPO jobs have also moved to work-from-home. However, the inadequate infrastructure at home and lower number of business requests has led to jobs being culled across companies.
 
The job losses in IT also pertain to customer-support and external technological support to other companies. The IT sector employs 5 million people in India. Added to this is the trouble for employees on the bench, who are being laid off. 
 
It was earlier reported in July 2020 that IT major Cognizant has begun terminating bench employees as business has taken a hit after the Covid-19 outbreak.
 
Similarly, French IT services provider Capgemini is now laying off bench employees in India as the pandemic has hit its business. The company is laying off employees who have been on the bench for more than two months. Recently, Accenture also announced layoffs along with many other companies.
 
Start-ups
 
Considering the size of this industry, startups were among the early victims of the pandemic. Industry estimates said that 100,000 employees across business segments such as transport, travel, accommodation and food delivery have been laid off due to a slump in revenue.
 
Bengaluru-based food delivery major Swiggy had said in May that it would lay off 1,100 employees and shut down some of its businesses due to the crisis caused by Covid-19.
Similarly, online food delivery and restaurant-booking start-up Zomato told employees in May that it would let go of 13 percent of the staff and cut the salaries of the remaining employees by up to 50 percent for six months.
 
Ride-aggregation platforms Ola and Uber had also announced plans to lay off 1,400 and 600 employees, respectively, in May 2020.
 
BFSI sector
 
Due to the nature of the financial services business, which falls under the ‘essential services’ category, the quantum of job losses was lower in the BFSI industry. Industry estimates said that 30,000 jobs have been lost so far in the banking, financial services and insurance (BFSI) sector, with the majority of the roles being in sales.
 
Within BFSI, the banking and non-banking financial companies segment constituted the majority of job losses. The BFSI sector employs nearly 9 million people in services such as branch banking, stock broking, insurance sales and mutual fund distribution.
 
Is revival anywhere in sight?
 
The process of revival as far as employment is concerned is expected to take three to four months more. Hiring consultants said that future layoffs can be curbed only if the lockdown is completely lifted and vaccine distribution is in sight.
 

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