THE COVID-19 EMPLOYMENT IMPACT : Rescuing Businesses, Saving Jobs

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THE COVID-19 EMPLOYMENT IMPACT : Rescuing Businesses, Saving Jobs

The COVID-19 pandemic has led to thousands of employees losing their jobs and worst yet, the future seems murkier than ever.

--BY Nikeeta Gautam

A report recently published by the International Labour Organization (ILO) is indicative of the wrath unleashed by the Covid-19 pandemic in a country like Nepal which struggles to generate employment opportunities to provide jobs to its citizens. In the report titled ‘Covid-19 Labour Market Impact in Nepal’, the Geneva-based UN agency has warned that the Covid-19 pandemic and lockdown imposed by the government has put 3.7 million jobs at risk.“There are nearly 3.7 million workers earning their livelihoods in the sectors deemed most at risk to experience a significant (medium to high) reduction in economic output as a result of the Covid-19 crisis,” reads the report. According to ILO, nearly four in every five workers most vulnerable to disruption are in the construction, manufacturing and trade sectors. ILO’s estimates that between 1.6 and 2.0 million jobs are likely to be disrupted in Nepal in the current crisis, either with complete job loss or reduced working hours and wages. “Based on the higher-impact scenario, the jobs disrupted include nearly 780,000 workers in wholesale and retail trade, 446,000 in manufacturing, 404,000 in construction, 211,000 in transport and 62,000 in accommodation and food service activities and 83,000 in other services, real estate and administrative activities,” says ILO.

There have been massive layoffs in the tourism sector which has been the hardest hit from the global health emergency. “The fact that the visit of one tourist in Nepal contributes to employing around 11 people shows how important it is to save the tourism business from collapse,” expresses Binayak Shah, first vice-president of Hotel Association of Nepal. According to him, the hospitality sector provides direct and indirect employment to 1.1 million people. According to ILO, three-quarters of workers in the tourism sector are in informal jobs leaving them with no protection and no income.

Even after the lockdown is lifted, trekking and travel agencies, hotels and restaurants won’t be revived soon. Tourism entrepreneurs say that it will take at least two years for the tourism sector to bounce back. According to a recent UNDP report, job loss in the Nepali tourism sector is expected to be over 25 percent. The report was prepared with the help of a survey among 700 businesses and 400 individuals around the country more than a month ago. Tourism is a labour-intensive sector and it is dependent on sectors such as agriculture, entertainment and hospitality.  According to the Trekking Association of Nepal (TAAN), around 350,000 people are working as tourist guides and a total of 700,000 people are formally and informally associated with trekking business.

According to the UNDP report, in the aviation industry where profit margins are relatively thin than other sectors (four to five percent during peak seasons), staff of many companies have been asked to take unpaid leave from mid-April.

The restaurant sector has also been badly impacted by the pandemic. According to Arniko Rajbhandary, president, Restaurant and Bar Association Nepal (REBAN) there are around 3,500 registered restaurants in the major cities of Nepal. “Around 70,000 people are getting employment in the organised sector in restaurants,” he says. He mentions that the sector offers lucrative employment opportunities to people who don’t have sufficient formal education. “There are many Nepali foreign returnees who have opted to open restaurants or work in restaurants. A short training is enough to get a job in a restaurant,” says Rajbhandary.

Meanwhile, the pandemic has left nearly four out of five workers vulnerable to disruption in the construction, manufacturing and trade sectors. Ravi Singh, president of the Federation of Contractors’ of Nepal (FCAN) informs that around 1.5 million workers are engaged in the construction sector and among them 0.5 million are Indian nationals. As the construction workers are daily wage earners, they have no means to protect themselves in this time of crisis.

Another section which has been severely hit by the crisis is workers in informal jobs and home-based workers who are mostly women. According to ILO, around 80.8 percent of workers in Nepal have informal jobs. Similarly, there are approximately 1.4 million home-based workers in Nepal who produce goods for export. As the regional and international supply chains have been disrupted by the pandemic, these groups are also at high risk.

“Though the export has paused, we are still providing work because most of these women can’t sustain their basic needs if they don’t have any job to earn a subsistence,” says Malika Shrestha, president of Women Entrepreneurs Association of Nepal (WEAN) and executive member of the Federation of Nepalese Women Entrepreneurs Association of Nepal (FWEAN).

The Salary Dispute
With business drying up and cash flow of businesses severely affected, employers have not been able to pay salaries to their staff. Entrepreneurs seek urgent attention of the government to resolve this issue. “The government needs to lend its support to the crisis-stricken hospitality sector so that businesses can pay salaries to their staff,” urges Shah. He claims that hotel sector employees have been paid fully for the month of Chaitra. “But we can’t pay them from Baisakh as the crisis will be longer for the tourism sector,” says Shah.

However, a study conducted by the General Federation of Nepalese Trade Unions (GEFONT) in Baisakh found that 70 percent of employees working in different sectors have not received salary for Chaitra. “We observed that most employees of industrial enterprises have been kept at unpaid leave. The issue related to staff salary for Chaitra might get solved to some extent as we monitored all sectors,” says Binod Shrestha, president of GEFONT. “How can employers run out of money in just two months of closure?” questions Shrestha. He urges employers to show empathy for workers and share what they have in this time of crisis.

Though the government is yet to respond to the call to provide income security to all formal and informal sector workers, it has announced it will deposit the monthly contributions of employees and employers in the Social Security Fund (SSF) accounts of employees for the lockdown period. “If the crisis goes longer, the government might also decide to distribute the social security fund as loans to those who are registered at the fund,” says Kapilmani Gyawali, executive director SSF, adding, “But this will be done within a process and the government needs to frame a work procedure for this.”

Recovery Roadmap
As long as face to face human interaction remains risky due to fears over coronavirus transmission, businesses won’t recover the way they need to. People won’t come to restaurants; cinema halls certainly can’t function and shopping malls will not be crowded. And this affects the whole supply chain. The conditions in the job market won’t improve until the threat of the virus is contained.

“The situation is likely to get worse in the coming days. We will see a ‘W’ shaped recovery in the job market. As almost all sectors are affected, the employment cycle is disturbed everywhere,” observes Bharat Raj Acharya, vice-chairman, Employers’ Council.

Acharya views that businesses need to adopt ‘work-from-home’ model in all possible places to survive. “If the employees need to come to the workplace, employers must pay attention to following healthcare guidelines.”

TAAN President Khum Subedi says that they have been talking with the government about providing Rs 15,000 monthly loan to the trekking guides. “We have been requesting the government to give the loan from the recovery of Rs 50 billion which has been allocated for the tourism sector in the budget for the upcoming fiscal year,” he says. Given the current social and economic crisis, many sectors are also exploring new ways of doing business. REBAN has recently started a common online platform for all its member restaurants. “Many restaurants have been doing food deliveries through platforms like Foodmandu and others. But now if we depend upon these platforms, our staff will be jobless,” says Rajbhandary, adding, “As people won’t be dining in the restaurant for a while yet, we will mobilise the human resources accordingly.”

According to Malika Shrestha, FWEAN has recently started virtual training for women entrepreneurs so that they can mobilise the available workforce for production and sell their products online. “FWEAN has also created an online platform and now we will be getting various products from Kathmandu, Patan and Bhaktapur. For now, we are not able to utilise the workforce outside the capital valley due to the transport problems,” she says.

Ravi Singh says that FCAN is fully supportive of the government’s decision to replace Indian labour with Nepali labour. “The problem with Nepali labour is that they feel shy to work in the construction sector. But now, there will be many returnee migrants experienced in the construction sector,” says Singh.

Government Action Essential
Two and half months into the crisis and it has now become evident that businesses will die out without support from the state. It is feared that the hotel sector, where some Rs 300 billion is estimated to have been invested over the last 5-6 years, for instance, will collapse causing permanent loss of thousands of jobs. “This has happened in the past during the insurgency years and it will become inevitable if the government does not lend its hand to the crisis-stricken hospitality business,” warns Shah.

There are fears that the employment situation will worsen with the return of large numbers of migrant workers who are looking to come to their homeland after losing their jobs in foreign lands due to the Covid-19 crisis. In a country like Nepal where the combined job generation capacity of public and private sectors annually stands at about 60,000, it will be a herculean task to manage the returnees whose number is expected to top 1.5 million over the next few months.

In his budget speech, Finance Minister Dr Khatiwada announced an ambitious plan to generate more than 800,000 jobs. According to migrant labour expert Ganesh Gurung, the government needs to make concrete plans to ensure engagement for all the returnee migrants. “It has been 65 years since the government has been talking about providing employment to citizens,” Gurung adds. “But see where we are. Every day around 1,200 Nepalis fly abroad. And there is no data of the ones who go to India for work. Why not support to create 100,000 entrepreneurs so that they can give jobs to 600,000 people?” he says.

“But the government’s plan must be clear enough for any working-class person searching for jobs. He or she should get confidence and get motivated when the government talks about entrepreneurship and job creation,” concludes Gurung.

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