Save Business to Save People

Instead of forcing businesses to pay employees, there are better ways for the government to do good by helping business stay afloat during and after the crisis

- Gunjan Paharia

THE country is currently dealing with not only the COVID-19 pandemic, but also a lot of collateral damage caused by the virus that is now threatening to go out of control. The worldwide economic slowdown is now threatening the livelihood of millions across the globe, including people in India.

For most companies, the second quarter of this year has been wiped out. They are not only dealing with loss of revenue due to the lockdown, but also the impact of all the major economies slowing down. This is impacting bottomlines, translating into lower production, workforce layoffs, lower profits, and thereby lower taxes. With production down to zero, employees locked down in their homes and no sales, most micro, small and medium enterprises (MSMEs) are looking with concern at the biggest fixed cost in such an environment—the workforce.

The government’s relief package of Rs 1.70 lakh crore was an urgent response for the survival of millions, but not a solution to sustain the economy or ensure a quick bounce back after the COVID-19 crisis is over. The ministry of home affairs has made it mandatory for employers to pay salaries during the lockdown period, regardless of whether an employee is required to stay in quarantine or comply with a stay-at-home notice. The MHA has also directed that all employers—in industry, shops and commercial establishments—shall pay wages on due date, without any deduction, for the period their establishments are under closure during the lockdown. This prohibits any deduction or delay in payment of salaries to any employee on account of working from home or leave due to lockdown. The government has invoked the Disaster Management Act, under which this is now a binding law, irrespective of what other laws may say. Any violation of the order would invite punishment, including imprisonment and/or a fine.