If Governments Can, Why Can’t Private Business Organizations Cut or Defer Salaries, Questioned 72 Percent Countrywide CEOs Surveyed

Hyderabad, India | 6^th May 2020: The Work From Home (WFH), implemented by IT & ITEs, Manufacturing and Capital Intensive and Allied Industries and Modern and Online Retail industries, by and large, has been successful. 58 percent of the companies surveyed implemented 100%, some could implement to the extent of 70 percent and very few less than 50 percent. 

Lockdown impacted especially the Startups, SME’s in India with an impact of 60% to 90% for 350 Companies on day 1 and for significant 110 Companies more than 500 people, the pandemic affected 100%. 

72% of CEOs surveyed felt that it was not appropriate to give paid leaves to employees during the lockdown as advised by the government. Only 28% felt it was appropriate. Further, they questioned the double standard of the governments. When governments can slash or defer salaries their employees, why can’t private business houses are allowed. When governments can do this, why can’t we, they wanted to know. 

During the survey, the Business Owners came up with top five suggestions to the Government, which include as follows.

1. Government should pay employees PF and ESI for the month of March, April and May
2. To provide support to the industries by providing Rebate in taxes, reduce interest percentage, provide employees welfare activities, make sure utilities are available at controlled cost.
3. Government should pay 50% of Employee cost for MSME with turnover less than 50cr for shutdown period and 25% for a period of 3 to 6 months beyond shutdown till business conditions improve
4. Deposit of Rs 15 lakhs to each family as promised by PM earlier or some of amount to combat next 6 months. Smaller companies need access to easy loans from banks and NBFCs to rebuild their businesses
5. Release some Unemployment Allowance especially those who are jobless and who were earning less than Rs. 15,000/- per month

These and more interesting observations found in a survey “Impact of COVID-19 on People and Industries” conducted during the March 29^th to April 29^th by a Hyderabad based Husys Consulting Limited, an HR Function Management Company, headquartered in Hyderabad. Husys conducted a quick Pulse Survey to know the impact of COVID-19 Pandemic on People due to Business Disruption.

The survey by Hyderabad based Husys Consulting Limited, India’s first listed HR Company on the NSE Emerge SME platform (Ticker: HUSYSLTD). It covered 500 plus companies across India and across cross-section of industries such as –

• IT & ITES Product &Services: 45%
• Manufacturing & Capital Intensive and Allied Industries: 40%
• Modern Retail/Online & Other Businesses: 15%

Shared Gundlapally Ramalinga Reddy, Founder, Chairman & Managing Director, Husys Consulting Limited in a press note issued to the media in India today. 

High Affected Industries includes: Aviation, Hotel Restaurant & Tourism, Auto Dealerships, Ceramic Tiles, Gems & Jewellery, Retail, Shipping, Ports & Port Services, Seafood and Poultry and Microfinance Institutions.

The few Key Observations of the respondents are:

• Employees Strength included 21% (105 Companies) with 500+ people, 16% (80 Companies) with 51-100 people while 40% (200 Companies) for less than 50 people.
• For 54% of the Participating Companies, Work from Home seemed a possibility though some faced challenges of productivity due to connectivity issues & for smaller firms Data Security was one of the major concerns.
• Was WFH (Work From Home) a Success: Out of 270 Companies, 159 Companies implemented WFH 100% immediately, 57 Companies could manage 70% and about 57 Companies were able to execute less than 50% which resulted in adding stress on Business Continuity due to Reduced Revenues & Unsatisfied Clients.
• Lockdown impacted especially the Startups, SME’s in India with an impact of 60% to 90% for 350 Companies on day 1 & for significant 110 Companies the pandemic affected 100% for organisations of more than 500 people
• 100 Companies accounting 22% of survey responded the Business Impact is Upwards of 30% up to 60%
• 17% Companies did not pay the Senior Management Salaries at all with 8% Middle Management not receiving salaries & with 4% people receiving up to 30% Salary, 8% people receiving up to 50% Salary, 9% people receiving up to 75% Salary
• 77% of Employees received salary in full with 25% of reduction in March Month salary for 9% & Rest paid in full with 24% Companies stating April to May No Pay/Can’t pay 
• More than 50% of paid companies reduced from 47% (No. of Companies) to 34.34% (No. of Companies) for the month of May assuming no stimulus package from Govt.
• Considering the solutions in this Pandemic, 23% (120-Companies) Considering for Reducing Salaries & Staff, another 12% (95 Companies) to layoff/Terminate people, 24% to reduce some & of the salaries & another 29% to maintain the Status Quo.
•  More Actionable ideas include More people in Sales & focus on Revenue, Reduce cost on Travel, Vehicles, Rent, Engagement Activities, Loaning people to other Cos, WFH continuity for some & Onsite called back to Offshore.
• Definitive Solutions by Business includes 115 Companies reporting No Further Increments, No new Hiring, Focus on more responsibilities on existing staff.
• 130 Companies to Increase No. of Hours & Adjustment of Leaves & Leave without Pay, While Others to look at GIG Workers, New Business Models, Build New products, Improved Automation.
• SME’s when asked whom they approach for advice in difficult times, 55% accounted for from well-wishers coupled with their own Decision making. 29% to go to the Specialist Advisory with the Government Advisory for less than 12%
• On Govt’s Advice for paid leaves for Employees during lockdown, 72% CEO feels not Appropriate, only 28% mentioned as appropriate.

“While advising us to Pay, why government is differing payments is a big question”, some business owners raised.