Chandigarh industry stares at layoffs, pay cuts for sustainability amid Covid-19 lockdown
The industry and businesses in Chandigarh have started resorting to sharp salary cuts amid government instructions not to fire employees.
Salary cuts by at least 30% to 50% will be enforced by the industry as it looks to reduce its expenditures to sustain during the nationwide lockdown.
There are around 3,000 medium and small scale manufacturing and service sector units in the city’s twin industrial areas employing around 30,000 workers.
“More than 90% industrial units have paid salary for the month of March to their workers as was directed by the advisory of the central government. But from April, most the factory owners are not in a position to pay more than 50% of the salaries to all levels of workers,” said Naveen Manglani, president, Chamber of Chandigarh Industries.
Industrialists say while factories were operating till March 22, in April, these will remain closed for the entire month.
“With Chandigarh identified as a hotspot and categorised in red zones, it is unlikely that factories will start working even in May. This is an unsustainable situation for the industry where no income is being generated for such long period. Unless the government intervenes, most of the factory owners will not be able to pay its workers,” said Pankaj Khanna, president, Chandigarh Industries Association.
At least 50% of wage cut, say industrialists, is allowed in case of layoffs. “Labour laws allow the industry to pay 50% in case of layoffs for 90 days, when the factory is closed for at least 15 days. So, at least this much salary cuts will be banked upon by the industry. The 50% that we can pay should be allowed to be compensated in the form of working overtime on Sunday and holidays in the coming year,” said Manglani.
Industry insiders say April is very crucial for the industry’s sustainability. “These are tough times for all sectors including IT. If there is no financial package from the government, then major layoffs and pay cuts will be a natural option for the industry,” said, Sarvjeet Singh Virk, managing director, Finvasia.
GOVT INTERVENTIONS ON INDUSTRY WISHLIST
In a letter to the director industries, Chandigarh, the industry bodies have demanded, “The principle of ‘compensatory off’ should be applied to all the employees across the board for all the non-working days due to Covid-19 in the financial year 2020-21. Alternatively, lay-offs as provisioned in existing labour laws should be allowed.”
Also, industry representatives have requested employer’s contribution for EPF and ESI during 2020-21 should be compensated by the government. MSMEs should be appropriately incentivised for paying wages without work during the lockdown period.
“These concessions have to be made for the industry so as to not only sustain it but also its workforce,” said Khanna.