Home Feature Lockdown 2020: Lives and the Economy in Peril

Lockdown 2020: Lives and the Economy in Peril



At least a hundred million Indians have lost their jobs owing to the lockdown; from the end of March, firing employees or requiring them to go on indefinite leave without pay has become a practice for most companies and establishments. Reducing salaries (some by as much as 85 %) has also become prevalent. The All India Trade Union Congress estimates that over 5 million workers have suffered partial or full loss of wages.

The question of whether salaries should continue to be paid, has now reached the Supreme Court, which is currently hearing two Public Interest cases on this issue. One seeks to protect employees from termination and salary cuts, while the other challenges the Government’s directive to pay full wages during the lockdown.

The key question before the Court is whether and to what extent workers’ rights should be protected against the backdrop of the challenges being faced by employers, companies and industries. In the current scenario this issue needs to be handled with particular sensitivity, for on the one hand, people have no choice, in that they are unable to work owing to unforeseeable and unavoidable circumstances. On the other hand, companies and establishments are facing huge losses due to the lockdown.

Concerned about the current situation, Prime Minister Modi has urged companies to be considerate to all employees and not terminate their jobs during this period. Directives have also been issued that go beyond the boundaries of Indian labour law to protect all employees, whether they be blue-collar, white-collar or contractual. The Ministry of Labour and Employment has advised all establishments, both public and private not to terminate jobs, including those of casual and contractual workers. They have also advised them to not reduce wages. This was followed on March 29th by an order issued by the Ministry of Home Affairs stating that: “All the employers, in industry or in shops and commercial establishments, shall make payment of wages of their workers, at their work places, on the due date, without any deduction, for the period their establishments are under closure during the lockdown.”

As of now, the Supreme Court has refused to stay the order. A decision that protects the life and health of millions. The final decision in the case is, however, yet to be delivered.
One must ask though, is it fair to put this burden solely on employers who themselves are sinking in the lockdown-induced economic quicksand?

Most companies and establishments in India find themselves unable to pay wages, owing to their financial losses. The All India Manufacturers Organisation that represents around 100,000 small manufacturers has stated that over two-thirds of its members are facing difficulties in paying salaries. Only leading companies, such as Tata Steel, Bharti Airtel, Lava International and NTT Netmagic, have the financial wherewithal to take care of their employees during the lockdown. Small and medium-scale companies and industries in India do not have the same ability to absorb the shock of the loss of profits and to continue to pay salaries.

Thus, while the humanitarian and human rights basis of the order is indisputable, its implementation requires that the Government provide support to companies. Fairness and justice demand this. This is, in fact, being done in several countries, including Germany, France, UK, Ireland, Italy and Spain, all of which have put in place policies to subsidise wage payments for companies. Through its Coronavirus Job Retention Scheme the UK government will reimburse companies for 80 % of gross salaries up to a maximum of £2,500 per month. Italy is also doing so up to 80%. Spain, Ireland and France up to 70%, and Germany up to 67%. South Africa has also established an Unemployment Insurance Fund to assist employees who are unable to work owing to the current restrictions. Sweden and Denmark have also introduced special support measures in response to the current scenario.

Germany has, in fact, had a program that provides support to companies facing a temporary and unavoidable reduction in orders and profits owing to a crisis for over a century. Through the Kurzabeit program they assist them by covering lost net wages by up to 67%. This gained international attention during the financial crisis in 2008, and is credited with enabling Germany to recover from the crisis with relative swiftness. Unemployment would otherwise have risen by twice as much.

These programs aim to ensure job preservation, thereby, making the pathway for recovery for companies, as well as the broader economy easier. In the absence of such assistance, Indian companies will be unable to retain employees, considerably slowing economic recovery for them and the nation as a whole.

(Yatharth Sinha  Is a lawyer specialising in Civil and Criminal Law, as well as the managing partner of a Delhi-based law firm. He is also a travel writer and an avid trekker in the Himalayan region.) 
(Dr. Tarini Mehta Is an Assistant Professor at Jindal Global University’s School of Environment and Sustainability, and a lawyer specialising in Environmental and Human Rights Law.)