The biggest pandemic of all times caused by Coronavirus has given birth to global recession fears and now experts too are alluding to the possibility of this being true. As the Covid-19 pandemic continues to grow globally, the global economy is taking a hit with each passing day. Things look grim as there is a long way before a Coronavirus vaccine can be generated.
There are many sectors in Covid-19 affected countries such as aviation, hospitality, travel and leisure which are amongst the worst-hit because of the global outbreak. Economists across the globe say that this slowdown will be one of the worst phases that the global economy will face. A slowdown is never only limited to large corporates and companies. It is expected to affect every single individual.
Three of the most obvious ways in which a global recession affects people are given below:
• Unemployment: Due to the slowdown, there has been a low possibility getting big size business across various sectors. In these tough times as it is quite impossible to onboard new employees due to a lockdown, companies and organizations have delayed the hiring process and have also freezed the hiring process.
While this situation is worrisome for the people looking for jobs, those who have their jobs and are low performers in hard it sectors, a global recession means that laying off existing employees. The sectors which are worst hit by the slowdown have started firing employees in order to manage the costs amidst the slowdown.
It is expected that the job losses in the tourism and hospitality sector alone are valued at over 38 million rupees!
This statement is backed by the data put forward by job-search platforms, who have registered a steep decline in job postings over the last 15 days.
• Pay Cuts: Considering the all-time low figures of business, companies are left with minimal operating capital which has forced them to either fire the employees or cut down on salaries.
Recently MakeMyTrip, the leading name in travel and hospitality sector, has announced a pay cut of around 50 per cent in the salaries of all the employees who are in the top-level management. Continuing the trend, IndiGo airlines and GoAir have also announced a pay cut ranging between 5 percent and 25 percent in the salaries of their employees which is a harsh reality and will have to be taken by all employees in a stride.
• Poor Cash Flows: Due to Coronavirus in India, there has been a national lockdown, which has resulted in low revenues across all the sectors of the economies. In such a situation it becomes difficult to manage the running costs. This has led to a steep misbalance in cash flows as many companies are not able to generate revenue as the economy has come to a grinding halt. It will take a while for companies to get back on track be devising newer methods of generating revenue and getting work done from home from their employees. While this can be related to the 2008-2009 recession period, it is important t note that in the past recession, it was the businesses that were doing bad, but this time around it is not that there is an inherent problem in conducting business or in the economy in general.
While this is the bad news which comes with a global slowdown, here is a good news linked with Coronavirus outbreak and the impending global slowdown: Amazon US has declared that it is planning to hire an additional 1 lac employees to manage the warehouses and delivery operations of the company.
Sectors such as healthcare and e-commerce are expected to see a significant hike in the wake of Coronavirus contagion. There has been a hike in the online orders due to the lockdown.
This backs the statement that businesses are not doing bad, but its only the halting of movement which is causing a disruption in the way in which businesses were being done till now.
Some employers are even following the wait and watch approach before making any decisions and announcing any plans. Most of the employers have announced a work from home approach for the employees but managing a remote team is a challenging task in itself.
Companies are waiting for the things to go back to normal so that they can resume normal working and cover the shortfall in revenue. However, considering the current growth of the pandemic, it is very much uncertain to predict the time for the same.
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Data presented here is taken from company's inception
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