Firmsdecideto cut perks, salaries as demand shrinks
Air India, Apollo Tyres, Indigo have declared cost-cutting steps
nNEW DELHI: Even as Prime Minister Narendra Modi appeals to businesses to protect jobs in the face of the coronavirus pandemic, Indian corporates have started cutting salaries and perks.
Though the brunt is being borne by senior executives, lower-paid employees are also facing the heat. While Modi’s appeal on Thursday was directed more at protecting poorer workers, others have also been feeling the pinch after a prolonged slowdown.
State-run Air India, facing a sell-off, has announced cost-cutting measures like a reduction in the allowances of executive pilots, cabin crew and officers.
The airline has withdrawn executive entertainment allowance from executive pilots, reduced the layover allowance for cabin crew and decreased fuel reimbursement allowance for officers. “Keeping in view the financial position of the company in the wake of recent global development, a need is felt to take steps to contain costs as far as possible,” said an Air-india circular.
Though the circular is dated March 17, an Air India employee confirmed that the move remains effective. The airline’s spokesperson was not available for comment.
On Friday, one of India’s largest tyre manufacturers, Apollo Tyres, announced that its top management will take a cut in compensation, in the range of 15% to 25%. The move was put down to a significant decline in business due to the outbreak of
Coronavirus in important markets like Europe, North America and India.
Chairman Omkar Kanwar and managing director Neeraj Kanwar will take a pay cut of 25%, each, while the senior management will likely have to take a 15% reduction. “Apollo Tyres has a diversified and multinational presence and the pay cuts will affect all senior management at the global level. Coronavirus is impacting sales and profitability across the automotive industry as anticipation builds that the worst is yet to come with Covid-19,” the company said in a statement.
Indigo, India’s largest domestic airline, will cut salaries of a section of employees as the pandemic has curtailed travel demand.
“With a great deal of reluctance and a deep sense of regret, we are therefore instituting pay cuts for all employees excluding Bands A and B, starting April 1, 2020,” Indigo’s chief executive officer (CEO) Ronojoy Dutta said in an internal email. A spokesperson confirmed Dutta’s email but declined to elaborate. Bands A and B are the lowest paid staff in Indigo.
On Tuesday, budget airline Goair asked a section of its employees to go on short leave without pay. PTI reported that the airline has also terminated contracts of expat pilots amid curtailed operations.
Though the aviation sector appears to be the worst hit, other businesses are also trying to slash costs amid tapering demand. It is not just senior executives who are impacted.
An employee at Faridabadbased Franchise India Holdings
Limited (FIHL), a franchise solutions company, told Mint that the company has fired approximately 30 employees citing the Covid-19 crisis. It has also put some employees on unpaid leaves, for at least 15 days. A second employee said that those who have been told to work from home are getting salaries, but others aren’t.
The first employee also said that the company refused to give any written directive, instead calling people for one-on-one meetings and informing them of these measures verbally. “When I asked whether they can confirm that our jobs are safe post the 15-day period, they said it all depends on how long the crisis continues and they can’t confirm anything at the moment,” the employee said.
No official spokesperson from the company could be reached for comment, despite multiple attempts via email and Linkedin.
Following the closure of bars and pubs, India’s food services industry that employs around 700,000 people is also in a bind.
If lockdowns continue, the sector could look at a possible 20% to 25% unemployment scenario, said Gauri Devidayal, Director, Food Matters India Pvt. Ltd. Devidayal is also member of the National Restaurant Association of India (NRAI). Restaurant closures could also impact several affiliated jobs including small vendors, and housekeeping and security staff at outlets.
Earlier this week, Confederation of Indian Industry President Vikram Kirloskar urged businesses to “take conscious business decisions.”
(Prasid Banerjee and Suneera Tandon contributed to the report)