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Tuesday, September 22, 2020

Recruiters to trainees, veterans, the services sector bears brunt

From food to aviation, and IT to hospitality, the decimation caused by the economic distress is echoing across the services sector, which is estimated to employ over 33 per cent of the employed population and contribute over 55 per cent to the GDP.

Written by Aashish Aryan , Pranav Mukul , Prabha Raghavan | New Delhi | Updated: August 5, 2020 2:33:07 pm
Recruiters to trainees, veterans, the services sector bears brunt The IT sector continues to witness growth over the past six months but with job losses as businesses prepared for an uncertain future.

THE UNCERTAINTY is frustrating, says Dheeraj Kumar. The 33-year-old chef had to return to Hamirpur in Himachal Pradesh last month after the café in Mumbai, where he worked, shut down. After rising up the ranks in the city’s booming food business over the last 16 years, Kumar is now among a growing number of employees laid off in the wake of the Covid lockdown.

From food to aviation, and IT to hospitality, the decimation caused by the economic distress is echoing across the services sector, which is estimated to employ over 33 per cent of the employed population and contribute over 55 per cent to the GDP.

While agriculture has been resilient, and manufacturing activity rekindled by unlockdowns, much of the services sector is still struggling as physical contact is an intrinsic prerequisite for a business to get back on track. Eateries that opened after restrictions were eased have recorded minimal footfalls, according to trade bodies, with restaurants allowed to operate only till 9 pm until recently, and 10 pm from July 31. More so, they say, because around two-thirds of revenues for most restaurants come from customers coming for dinner.

Read | ‘Worst likely over as indicators show improvement’

According to Federation of Hotel and Restaurants Association of India (FHRAI), which represents 10,000 hotels and restaurants, only 20 per cent of its members have reopened since the curbs were eased — and, 20-30 per cent of these are planning to close again because of non-feasible operations.

The Sagar Ratna chain of restaurants, which employs 7,000 people from across the country, especially from Assam, Odisha and Bihar, has seen 35-40 per cent of its workforce return to their home states. “We are are making operations work with whatever we have left. We have landlords supporting us by reducing or foregoing rents. We are praying that the situation turns around quickly,” says Roshan Banan, managing director, adding that the group has not recovered even 10 per cent of its earnings before the lockdown.

The chain is now considering borrowing from institutional lenders. “We have salaries, electricity to worry about. We are talking to lenders and in the process of arranging funds… mainly for operational costs,” says Banan.

The hit taken by restaurants has had a ripple effect on the 70 lakh people employed by the segment, such as Kumar from Hamirpur. “I have a house loan to pay on which I have sought an extension. These are tough times, and I’m hoping the bank will understand. My mother has been sending money from her savings because my salary was heavily cut in the months leading up to the cafe shutting down,” Kumar said.
It’s not just restaurants and cafes, food-delivery platforms Zomato and Swiggy decided to let go of 1,641 staffers in May.

The IT sector, meanwhile, continued to witness growth over the past six months but with job losses as businesses prepared for an uncertain future. According to Oxford University’s The Online Labour Index (OLI), which provides an online gig economy equivalent to conventional market statistics, India is the largest overall supplier of online labour and home to 34 per cent of online workers across the globe.

But for Nadiya Begum, 26, who worked as an HR professional with ITC Infotech in Bengaluru, the loss of her job came with a twist of irony. She had been working with the company since last November and, when the pandemic struck, nearly 35 of her 58 team members were asked to resign.

“Since I had on-boarded many employees in the past six months, my number is listed as a recruiter on many job portals. Imagine the irony when some people, who had also lost their jobs during the pandemic, started calling me up to ask if I could hire them. I could not tell them that even I had lost my job,” she said.

Begum says she had used her savings, about Rs 1.5 lakh, during her marriage last year. And now, she is dependent on her husband. “If he had also lost his job, we would have been out on the streets,” she said.

In the aviation sector, which is globally one of the worst hit, the shutdown of domestic passenger flights in India for almost two months had a cascading effect on ancillary sectors such as airports, ground handling, ground transportation, etc.

For instance, a 24-year-old customer service trainee for a ground-handling company at Ahmedabad airport, who obtained his diploma in hospitality last June, has found his career grounded before it could take off. “I am reconsidering my plans seeing that aviation may not recover soon. For the first two months I received just half of my salary and then I was sent on leave without pay along with some other colleagues,” he says.

In June, the first full month of domestic flight operations since resumption on May 25, Ahmedabad airport recorded 1.05 lakh domestic passengers — 86 per cent lower than June 2019. This was in line with countrywide numbers, according to the Airports Authority of India. Airports saw 38.55 lakh domestic passengers during June, down 83.5 per cent from the same month last year.

The central government has also imposed capacity restrictions for domestic flights allowing airlines to operate only 45 per cent of their pre-Covid schedule. Overall, experts say, the impact has been devastating.

India’s largest airline IndiGo recently announced that it was laying off 10 per cent of its 27,000-strong workforce. Experts say the move is worrying because the company has the strongest balance sheet among its peers. Further, they point out, airlines are the cash conduit for other stakeholders in the aviation ecosystem, such as airports, ground-handling agencies, cargo handlers, aircraft maintenance companies, etc.

In a recent research report on emerging markets, rating agency S&P says it expects the Indian economy to contract sharply in 2020 and the services sector to be “severely affected, leading to widespread job losses”. “Migrant workers have been geographically displaced, and we expect it will take some time to unwind this process. There will be supply chain disruptions over the transition period,” the agency says.

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