Coronavirus crisis: SMEs send SoS to govt on salaries; else retrenchment inevitable

Prime Minister Narendra Modi while announcing Janata Curfew on March 19, days before declaring a complete lockdown, had appealed companies to not cut salaries and wages of employees. He also advised them not to retrench staff.

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With factories closed and cash flow virtually dried up, small and medium private firms want the government to come up with financial support for payment of employee salaries.

In a video-conference held by Minister of Railways and Commerce & Industry Piyush Goyal on Saturday afternoon, members from the MSME sector said that they would find it difficult to pay salaries of staff in the absence of government support during the lockdown period. Industry bodies such as Confederation of All India Traders (CAIT), FISME and Laghu Udyog Bharati represented SMEs in the meeting. They indicated that in absence of some aid it will be difficult for them to retain employees.

"United Kingdom (UK) government has announced it will pay 80 per cent of the salaries for certain employees. On the same lines, financial support can be given here too," an industry representative who attended the video conference said.

He said that massive retrenchment would be inevitable in case lockdown is extended and business establishments remain shut.

The agenda of the interaction with industry representatives was to discuss how industry was operating to make the lockdown effective, implementing work from home format, state-level issues and also how the exempt and essential services are being operated.

Speaking to BusinessToday.In, two senior industry members confirmed the discussion and hoped that government could work out a plan for salary payments.

Members of industry bodies Confederation of Indian Industry (CII), Federation of Indian Chambers of Commerce and Industry (FICCI), Associated Chambers of Commerce of India (ASSOCHAM) and Federation of Indian Micro and Small & Medium Enterprises (FISME) attended the high-level meeting.

Prime Minister Narendra Modi while announcing Janata Curfew on March 19, days before declaring a complete lockdown, had appealed companies to not cut salaries and wages of employees. He also advised them not to retrench staff.

The micro, small and medium enterprises (MSMEs) sector employs 110 million people and contributes 29 per cent to the GDP and nearly half of India's exports.

"While we may not be able to retain employees in the wake of Covid-19 (coronavirus) crisis, the industry would face huge problems in getting the workers especially unskilled ones back after the crisis is over. It will take almost six months to return normalcy," Managing Director of a Mumbai-based firm said.