The coronavirus pandemic has now started to impact the world economy to another level. The novel virus outbreak, which was once considered to be China’s “internal problem”, has now become a global headache. The World Health Organization has now termed the outbreak as “pandemic”, forcing governments to act on war footing to combat the disease and bring normalcy to life.
The virus has infected more than a million people worldwide and claimed about 75,000. Seeing such a massive spike in the rate of transmission, countries have restricted any kind of international travel and imposed lockdowns, internally and externally. Offices are now shut, shops closed and movement of goods have come to a halt. The pandemic has led to the world’s largest “work-from-home” experiment.
Although organizations are trying really hard to keep businesses running, experts estimated that the pandemic will take the world economy to a crisis even worse than the 2008 Great Recession. The International Labour Organisation has predicted that the pandemic will cost upto 2.5mn jobs. But the worst affected by this will remain the travel and airline industry.
Since the travel restrictions have been put in place and a fear of virus transmission has caught people’s mind, any kind of travel worldwide has come to a halt. Airlines have been forced to ground their fleets, send employees on unpaid leave and cash as much cash as they can. Industry bodies are even estimating that if the pandemic prolongs then many of the carriers will have to go for bankruptcy filings.
Travel aggregators are now compelled to return all the amount collected from customers for their tours. Even the customers who had booked tours for months after May, are asking for refunds from the companies. This has led to a massive cash-crunch in the travel industry. New age startups and even well established companies are now opting tough measures like laying off a major chunk of their workforce to prevent cash burn and attempt survival.
Although governments and labour unions have asked organizations to not fire anybody in the time of this unprecedented crisis, we have been witnessing that companies are resorting to lay offs. Recently there have been numerous reports on organizations asking their employees to either voluntarily opt for resignation or go on undefined unpaid leaves. Here is a list of a few companies that have either shredded their workforce or have resorted to employee salary cuts due to the coronavirus impact.
1.) TravelTriangle
The nine-year-old travel aggregator company has recently handed over pink slips to more than 200 employees at various levels. The firings are expected to continue for some time and may impact over 30–45% of its total workforce. The move is said to be an outcome of piling up losses further fuelled by the complete halt on business and vacation travel considering the coronavirus pandemic. It is believed that the maximum number of layoffs has been made from international destination teams. Due to the virus, travelers have been canceling on scheduled trips since January, which led to severe losses for the company.
2.) Fareportal
The New York-based global tech travel firm Fareportal has reportedly laid off about 200 employees from its Gurugram and Pune offices amid the ongoing pandemic. Several ousted employees have said that the Human Resource department of Fareportal has forced employees to resign themselves otherwise they won’t be paid their pending salaries too. The company is said to be facing huge financial losses and are only firing people whom they had recently hired. A few tweets by employees pointed out that the HR team asked them to submit their resignations via a phone call rather than an official mail. The fired employees got the official end of contract email only after they submitted their resignations.
3.) Korean Air
South Korea’s largest carrier Korean Air has asked its 20,000 strong workforce at home and abroad to go on a rotation-based paid leave for a period of six months. It is being said that although the rotational leave program will last for six months, individual employees will leave work for three to four months. During this period of leave, employees are likely to receive about 70% of their salaries.
4.) Ixigo
In an attempt to save cash burn, Indian travel and hotel booking platform Ixigo has slashed the salaries of its employees across all levels. The top management has agreed to take a 60% pay cut while the rest of the employees will be witnessing a reduction of about 20-50%. Along with the salary cut, both the Co-founders have decided to forgo their entire salary until it’s business as usual.
Although there have not been any major layoffs in any other industry other than travel and airline, a survey by CII has predicted that about 52% of CEOs fear job losses in their companies post lockdown.
Commenting on the survey, CII Director General Chandrajit Banerjee said: “The government could announce a fiscal stimulus package for the industry and implement it on fast track mode, given that the sudden imposition of the lockdown has significantly impacted industry operations and the uncertainty of a recovery threatens the substantial loss of livelihoods going forward.”
Sandeep is a journalism and mass communication graduate with a keen interest in politics and business. He is a part of Research & Content team at HrNxt.com.