The COVID-19 outbreak has triggered unprecedented mass layoffs and furloughs across different businesses. Millions of people have already lost their jobs worldwide, and it is being estimated that it will get worse as the economy begins to sputter.
The global economy is already being pushed toward recession amidst this pandemic, and job losses are already erupting in all sectors. Looking at this trend, it seems that layoffs have become a new normal. From online food delivery, tourism, hospitality, mobility, to social commerce and foodtech companies, even small start-ups and well-funded unicorns are streamlining or downsizing operations to cut costs as demand remains affected due to the COVID-19 outbreak and lockdowns.
According to a recent report, approximately 1.9 million people have applied for U.S unemployment benefits in the last week of May 2020. This means that employers are still cutting jobs even though the lockdowns are being lifted, and businesses are opening up gradually. It looks like the damage done by this pandemic is likely to be much more profound and long-lasting.
COVID-19 Pandemic- Catastrophe For Both Workers And Businesses
The coronavirus outbreak has affected both developed and developing countries alike. The catastrophe is more evident in specific sectors like retail, tourism, hospitality, and food services. According to a report from the United Nations International Labour Organization, coronavirus could wipe out globally, equivalent to 195 million jobs.
This is the worst crisis in decades; the increase in layoffs, reduced wages, and working hours are becoming the new normal. A large part of the workforce is in low-paid, low-skilled jobs, and a sudden income loss can be devastating. In a developing country like India, the unemployment rate shot up to 27.1% in the week ended May 3, 2020. This is being said as the highest spike so far. In the U.S alone, the number of people applying for unemployment benefits has swelled to 39 million.
Across businesses, the situation is the same. Since the onset of this deadly virus, the demand has seen a downward trend. As customers are buying fewer goods barring the essential commodities, it has led to a domino effect. The manufacturing company stops ordering parts, and as a result, the suppliers lay off their workers. While some companies have laid off employees, offering them proper compensation and support, others have forced employees to resign without any prior notice.
Pandemic Triggered Layoffs
Lockdowns imposed across nations to curb the spread of coronavirus have significantly reduced the revenues of many businesses. To name a few –
Uber Technologies eliminated 3000 jobs in India in the latter part of May 2020. The company is closing many of its offices across the globe. It is on the verge of shutting down many of its side projects to deal with the impact of the coronavirus outbreak that has devastated the ride-hailing business.
As the COVID-19 pandemic keeps people confined to their homes, the aviation industry has been negatively impacted, and the loss of business has led to layoffs. Boeing laid off 6770 workers, Air Canada plans to layoff 20000 workers, Emirates has laid off 600 pilots, and many more are following the trend. The airlines are trying to scale back their businesses as the prospect of a quick recovery from the pandemic fades, and they prepare for a world where people will fly less.
Airbnb Inc. announced that it would be cutting 25% of its workforce globally as the virus continues to hit the travel industry. TripAdvisor reduced 600 roles in U.S. and Canada and an additional 300 in other countries. Besides that, an undisclosed number of the workforce has been furloughed.
The COVID-19 Impact
An increasing number of infected cases and deaths is forcing businesses globally to upend workforce and business practices. The scope of layoffs will determine how badly the COVID-19 outbreak will damage the broader economy. If companies principally retain employees, the downturn could be relatively shallow, and the rebound could be swift. However, if people continue to lose their jobs and their spending power, the damage could be colossal.