Job Loss or Pay Cut

Coronavirus or COVID-19 is the new genesis wreaking havoc in the careers and livelihoods in addition to the lives of people. The year 2020 began with the spread of the new dread called COVID-19 across the world bringing significant changes in the global economy. It further led to modifications in individual and national budgets. Much of the population all over the world are anticipating a difference in their careers. There can be a rise or fall in jobs.

Come March and India sees many of its industries, start-ups, small and medium scale businesses caving in, thus bringing along salary cuts, change of workplace (work from home), unemployment, and many other unpleasant changes. The total number of jobs in India which are under an impact is around 136 million as per the National Sample Survey and Periodic Labour Force Survey.

Sector-wise impact:

The impact of lockdown is not uniform throughout the various sectors of the economy. While some industries are floating through the rough phase, the other areas are bearing the brunt. Sectors like travel and tourism, aviation, automobiles, construction and real estate, and manufacturing are the worst hit. In contrast, information and communication technology, healthcare and medical supplies, E-Commerce, online retail, logistics, and transportation are still manageable because the workforce in this sector was able to work remotely. 

Let us have a look at the results of an online survey conducted on the impact of lockdown on the employment in India, by one of the leading newspapers in the country –

The above table gives a clear view of the state of employment in our country.

Yet another representation of – A survey about the impact of lockdown on jobs and businesses; conducted by different organizations across the world gives an understanding about India’s overall unemployment rate as against the effect on the employment rate and the businesses –

The understanding of the unprecedented unemployment and the accidental and distressing changes in the employment pattern brings an individual to a threshold of the career path. Such challenging times persuade a person to think beyond the situation and find out ways and means to ensure minimum damage to his or her career and finances.

Protecting and Managing a Career:

With the enormous impact on the careers, budgets, and family planning going astray, and large-scale economic damage looming over the employees, these are indeed trying times to save one’s job. The impact on a career is just a passing phase of the global economy. As someone has aptly said, Stop worrying about what you have to lose and start focusing on what you have to gain, an individual should focus on dealing with rather than wasting time in giving a riposte to the circumstances.

• Job losses and salary cuts are on the way. Many companies are cutting down salaries or laying off people to survive their operational costs. At such a time, the company will surely remember the employee who supports and stays with them. Therefore, if an individual has experienced a significant salary cut, it would be wiser for the person to stay put in the same job rather than quit and look for a new one. At the same time, one should not remain still but be on a look-out for better breaks, which may spring up during lockdown with a resume. To covert a jobless situation into an opportunity, a person should upgrade his/her skills. This upgrading of expertise will enable an individual to negotiate better land him/her with a better job.
• If a person feels undecided about whether the company will b retaining or asking him/her to quit, it is always better to wait for a couple of months before deciding the future course of action. One can go on leave without pay until further notification. During this period, an individual can connect with acquaintances and recruiters to know the inside out of the company he/she works. Also, one needs to be aware of getting written confirmation of the job from the company’s senior officials in case he/she is hired but put on hold. Being patient is good but being proactive is even better.
• This year the increments and performance appraisals are withheld. It is because of the overall economic slowdown. To be able to provide for the bonuses or salary-raise, a company must run operations as it had before the COVID-19 strike. The boost in businesses will restore the mobilization of demand and supply, resulting in good returns. However, this scenario is still one or two quarters away. Even if the company appraises its employees, the increments are going to be reasonable for this as well as the coming year.
• An investment in acquiring knowledge gives a person the best interest. As mentioned earlier, in case of a job loss or a massive salary cut or leave without pay, look out for either upgrading skills or diversifying to learn a new skill. During the lockdown, with ample time on hand, one must use this time to ‘Learn to Unlearn.’ Upskill and reskill oneself to stay not only productive but also with the recent trends in the field. Give the career a much-needed boost with proactive learning. An investment in knowledge gives the best interest.

Protecting Finances:

The budgets and financial planning of lakhs of families went chaotic after the lockdown. The lockdown has been taken a toll on the people by way of salary cuts, variable pays on hold along with increments, and appraisals withheld. For some, the worst nightmare was losing their jobs. Money is like emotions; it is something you must control to keep your life on the right track. So, let us see some of the ways and means to protect the dwindling finances.

• Securing the risks is the first step in the direction of protecting one’s finances. Create an emergency pool of funds for covering routine monthly expenses so that there is enough provision for at least the next six months. The next step is to ensure that one has provided for an adequate health and life insurance cover. The insurance protection will empower an individual to cover the family against unprecedented medical expenses and give a financial back-up to the policyholder as well as his/her family.
• Next in line is the assessment of income and expenses, assets, and liabilities. Lockdown has seen scissors run through salaries, but as against this, savings are showing an upward trend in the books of finance. Now, this has happened due to a significant cutting down of travel, dining outs, entertainment, work-related expenses, and other fancy full expenses. With the clear portrait of assessment, an individual can prioritize costs, as well as his/her goals and further, find better resources to allocate the additional funds.
• No one anticipates a sudden job loss or a pay cut, which may create a hiccup in financial planning. But in unfortunate circumstances, one may need to reschedule the loan EMIs and SIPs, even stop them for a few months and can request a delay in the payment of insurance premiums to the respective institutions.
• Finally, one should find out different ways and means to supplement his or her income. Upgradation of skills, re-skill, freelance, or even earn revenue from one’s passions.

Reliefs by the Finance Minister:

In addition to the above suggestions,
following announcements by FM Nirmala Sitharaman came through as relief for the
employees –

• Reduction of TDS (Tax deducted at source) / TCS (Tax collected at source) by 25% of the current rate and applies to all the payments. This reduction will increase the money on hand for people by Rs. 50,000 crores instead of paying them by way of taxes, thereby increasing the spending power of the people.
• The reduction is announced towards EPF contribution to 10% from the current 12% for the next months. This reduction applies to both the business enterprises and the workers. Moreover, the center will be paying both contributions, for the employer and the employee. This move will ensure an increase in the employees’ take-home salary.

Job Loss or Pay Cut – How to Manage your Finance FAQs: