Unemployment Rate At An All-Time High And It Is A Burden On The Economy!

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The harsh truth about the pandemic is that it has killed many people and with that, it has killed the dreams and the income of many families.

All the huge companies are not able to manage their funds during this time. This is not the right time for any economy or for any country. People are losing their jobs, businesses are being shut and there is nothing the government can do about it. 

The unemployment rate is at a soaring high figure. According to leading firms, the unemployment rate in India continues to go above 24%. Let us look at a few scenarios that happen when people are left unemployed:

  1. For an individual person, the cost of unemployment is the economic cost and mental cost. The person cannot sustain himself in society and cannot incur daily expenses for a long time. When productive people are left at home, the real state of the economy is shown.
  2. For the government of the country, unemployment means that the government will have to inject more money into the economy as subsidies and allowances. With the current state of the Indian economy and the fiscal deficit at a very high rate, the Indian government cannot undergo this tedious process. At the same time, since the income of the person has gone down to 0, the government will not collect tax from them. If there is no revenue for the government in the form of a tax but the government has to incur expenses, the government would have to borrow money. If the money is borrowed, the unemployment rate is said to be at an all-time high in the coming months also. 
  3. More importantly, if people are rendered unemployed for a long period of time, their skills are not updated and at times they are not as good as they were before for their job. The literal essence of unemployment is not just on the economic cost. It covers various aspects that are not often discussed but hold extreme importance.
  4. Apart from this, unemployed people means no income. If people do not have income, they will only buy necessary goods and not other goods in the market. Because of this reason, various businesses might end up with no sales. This is a vicious cycle which not only affects one person but the whole economy. People must be helped so that a situation like this does not come up at a macro level. Appropriate plans need to be created by companies so that a win-win situation for both the parties is formed.

INFORMAL SECTOR

In India, there is one sector that is not talked about. It is the informal sector of employment. The informal sector employs a large chunk of the Indian population. It is said that 4 out of 5 people in the global workforce are affected because of the pandemic. According to the United Nations, 400 million people that are working in the informal sector in India or at the risk of falling deeper into poverty due to the pandemic. The report suggests that this would be the biggest crisis in the world. There has been a huge disruption in world economies. This is the biggest test for international cooperation where countries can either work together for a better tomorrow or just compete with each other and fail at the end. Moreover, people who live in areas where the infection is still increasing, won’t be able to go back to work in the near future. If we look at the example of Maharashtra, the cases are increasing at an exponential rate and people are rendered unemployed. This is why poverty breeds in Maharashtra. There are hospitals with patients overflowing.

These people live in cramped up houses and are prone to the virus more than anyone else. This is why it is said that these people won’t return to the workplaces before the pandemic ends. Migrant workers have been shifted to their hometowns because of the horrifying experience they have seen, it can be assumed that they will not return to the factories to work.

Every fourth person in India is unemployed right now. Now let us look at a few huge companies that have laid off employees:

  • Zomato: one of the biggest food delivery apps, Zomato is letting go of 13% of its workforce. They have also announced huge pay cuts for the organization.
  • Ola: India’s own company which is making a name abroad is not doing so well right now. People are not preferring public transport, let alone cabs. Ola has laid off more than 1000 employees. The revenue of the company has fallen 95% in the last two months.
  • Cure fit: this is one of the biggest fitness companies in India. The company has downsized its operations is also closed its operations in a few cities. They have laid off over 800 employees. 
  • Swiggy: Swiggy is the biggest rival of Zomato. They have laid off more than 1000 employees and are trying to reduce the cost per month. Who thought a day would come when the biggest food delivery app would lay off its employees because they cannot sustain their operations for two months.
  • MakeMyTrip: MakeMyTrip plans to fire over 60% of its workforce because they cannot deal with the lack of revenue. 
  • BookMyShow: BookMyShow employs 1500 people in India and out of which it is laying off more than 300 employees. With the theatres been closed and the main source of revenue of BookMyShow being blocked, the company’s revenue is next to 0. 

If these huge companies can go for removal of the employees, how will this small company’s sustain?

According to a survey, the majority of the start-ups in India are about to be shut. 62% of the start-ups are suffering revenue decline. The pandemic has taken a toll on everyone and this is not an easy situation for the people who have been fired.

Moreover, in our country, the government is not speaking up about these issues. There have been no clear-cut rules about rent, taxes, and salaries. All the businesses and the corporations are suffering and are finding the solutions on their own. It is said that 4 out of 10 restaurants in India might never open up after the lockdown. Restaurants have started to change to contact less dining, delivering groceries, etc. 

GOVERNMENT

The people are dissatisfied with the lack of intervention on the government’s part when it comes to fighting for the employees. More and more people are losing their jobs and their only source of income. This is not a good sign for any country because the government would have to manage this workforce anyhow. If people do not have any income, they will not purchase goods in the market. If the goods are not purchased in the market, demand for the same will go down. When the demand for the same goes down, the real-time utility of the product declines and this leads to the slashing of the price of the commodity. This is a situation of loss for the entire economy and coming out of this situation is very tough.

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