The rapidly increasing economic consequences of COVID-19 on the world of work are proving to be far worse than the 2008-9 financial crisis that hit the major countries, with retrenchment equivalent to nearly 200 million full-time workers.
With the number of COVID-19 cases tipping dangerously with 18,64,629 and the global deaths crossing more than 1,15,286 the World Health Organization (WHO) declared the virus outbreak a pandemic in the second week of March 2020, 4 months following the novel virus first made headlines.
The coronavirus pandemic has affected the economy fiercely by hitting many sectors globally. No matter where in the world or in which sector, the crisis is having a dramatic impact on the world’s workforce and consequently the economy.
Nearly 162 countries are steadily going into lockdown, businesses across the globe are operating in fear of an impending collapse of global financial markets. This circumstance, clubbed with slow economic growth in the previous year, especially in a developing country like India, is leading to extremely volatile market conditions.
With rising unemployment, interest rates, and fiscal deficit, the economy in India has seen better days. Adding fuel to this fire is the novel Coronavirus that is sending shocks down Indian trade markets dependent on China for imports.
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1. Raw materials and spare parts
Nearly 55% of electronics imported by India originate from China. These imports have already slid down to 40% in light of the coronavirus outbreak and after lockdown. As a countermeasure, India is considering the promotion of indigenous production in a bid to reduce dependency on a single market.
Additionally, China is India’s third-largest export partner for export of raw materials like organic chemicals, mineral fuels, cotton, etc.; and a lockdown of the countries is likely to lead to a substantial trade deficit for India.
The toll on the pharmaceutical industry is of significant concern for India, mainly as 70% of active pharmaceutical ingredients (API) are imported from China. These active pharmaceutical ingredients are essential to a large number of pharmaceutical manufacturing companies in the country.
As COVID-19 has rapidly made its way through India, medication is going to be the number one consumer demand. Because there aren’t nearly enough APIs to manufacture drugs, the subsequent traders and the market are witnessing skyrocketing prices. The costs of vitamins and penicillin alone already see a 50% surge.
India is big on cultural and historical tourism, attracting domestic and foreign nationals throughout the year. It does not come as a surprise that a large number of confirmed COVID-19 cases in India include foreign tourists. But with visas being suspended and tourist attractions being shut indefinitely, the whole tourism value chain, which includes hotels, restaurants, attractions, agents, and operators are facing losses worth thousands of crores. Experts assume the tourism industry is likely to take a massive blow, and it could end up crippling the industry for the foreseeable future.
After the Government of India indefinitely suspended tourist visas, airlines are said to be working under pressure. Nearly 600 international flights to and from India were canceled for varying periods. Around 90 domestic flights had been canceled, leading to a sharp drop in airline fares, even on popular local routes.
Private airport operators have requested the Government to grant permission to impose a nominal passenger facilitation charge on airfares to cover the increased operating cost.
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5. Remote working
With major cities on lockdown, organizations have had no choice but to dig into their business continuity and contingency plans. Numerous companies have initiated a ‘work from home’ drill using critical resources to understand whether remote working conditions are feasible.
That being said, remote working also has its limitations and cannot be carried out by other sectors like retail, hospitality, or manufacturing, leaving them no choice but to face business interruption. Already, 70% of companies had a digital transformation in place or were working on one, but it seems most companies were not far from accepting COVID-19 a non-issue.
It has caught the world off-guard and to see digital marketing service companies thriving and can go through this crisis is commendable.
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Whereas in urban areas, moreover, workers who work in economic sectors not only carry a high risk of virus infection but are also directly impacted by lockdown measures like waste recyclers, street vendors, food servers, construction workers, transport workers, and domestic workers.
Current lockdown actions have affected these workers significantly, forcing many of them to return to rural areas, ILO explained.