Over 70% MSMEs Intend to Reduce Workforce: AIMO Survey

New Delhi: Over 70% micro, small and medium enterprises (MSMEs) intend to reduce their employees, owing to the challenges they foresee for the next three months due to the lockdown and COVID-19 pandemic, finds a survey by All India Manufacturers’ Organisation (AIMO).

On Thursday, AIMO released new results of the survey conducted online between May 24 and May 30 in which a total of 46,425 self-employed individuals, MSMEs owners, corporate employers and employees participated. Notably, the survey was conducted after the Central government announced a Rs 20 lakh crore financial package termed ‘Atmanirbhar Bharat’ package.

Earlier this week, AIMO revealed that the survey found that over 35% of MSMEs and 37% of self- employed entrepreneurs have begun shutting their businesses seeing no chance of recovery amid the COVID-19 outbreak and over two months of lockdown measures.

Commenting on the scale of the survey, K E Raghunathan, Former President, AIMO, said : “We received 46,525 responses for our survey. The most striking aspect was that 72% of MSMEs,

42% of the corporate respondents said that they will definitely reduce their head count to get their business back on track. In fact only less than 20% of all the categories said they would continue with the same headcount. The extent of the job loss will be more clearer by the end of August 20, as most of the respondents were in process of gauging how many of their labour will return and also they are currently gauging the optimum employee strength required to sustain their business in the near future.”

Concerns of businesses

Source: AIMO survey results

“On the issues likely to be faced during unlock period which began this week , the survey covered various aspects, such as demand forecast , collection of pending dues , raw materials , future EMI payments along with present interest burden and salary issues. Sadly, the biggest concern of 36% of self-employed was their ability to pay EMIs as they had issues with pending collections for work done earlier and also the receipt of new orders and profitable price for the business ” said Radhakrishnan, Hony Treasurer of AIMO.

“Until the demand situation in the market improves, both the experts and self-employed persons feel that their services will be on hold. The job market has also tanked with most companies freezing their recruitments for the near term. The future of their livelihood and the existence of the families that depend on them is in a very precarious position for most of the MSME entrepreneurs,” added Radhakrishnan.

Raghunathan said to tide over the problem of raw material, “one of the prominent suggestions from the respondents is offering raw materials under ration card, like PDS, to MSMEs through the government of India undertaking National Small Industries Corporation (NSIC) on credit and reasonable price immediately and also allow banks to accept bill discounting facilities for all sales invoices raised in the next three months , irrespective of the party being billed.”