24% Startup Employees In India Faced Salary Cuts Due To Coronavirus; But 60% Startups Paid Bonuses
The event that shadowed the entire of 2020, Coronavirus pandemic, is in true sense a sucker punch, that too, one in the mouth, which has left all activities upended.
The virus caused sharp economic contractions and stoppages and has expedited and transformed an existing slowdown into a severe recession. While the vaccine seems to be the cure to the virus, “entrepreneurship” is hailed to be the vaccine for covid hit economies.
The call for “Atmanirbhar Bharat” is out there and for the same Start-ups have a huge role to play as it’s not the big companies and giants of the business who can create such opportunities but the young and next-gen entrepreneurs can do it. Start-ups are the key here to revive the economy and make India a self-reliant country. Start-ups are not just another new business but they bring added value to society.
However the pandemic and the ensuing lockdown has severely impacted many of the startups. Startups are already notorious to have less cash in hand for their operations and according to a recent survey, around 70% startups have been impacted by the pandemic and 68% startups cut down their operational and administrative expenses.
In an attempt to survive, startups have been resorting to slashing salaries and employee lay-offs, according to RazorpayX, the neo-banking arm of Razorpay. As much as 24% of employees saw salary cuts. However, as startups found new ways to revive the cash flows, around September, the impact was a bit eased, least to say.
The easing is also evident as the percent of people affected by salary cuts dropped down to only 14.
In order to manage the expected declining profits due to the pandemic, many startups are deferring bonus and additional benefits to their employees in an attempt to conserve cash, which is very important to sail the tide. According to RazorpayX report, in this financial year only 59% of startups paid out employee bonuses between April and November.
If there is one section which has taken the worst hit, then it has to be the entry level job seekers as they had to bear the brunt of the dilapidated economic situation. There was almost a 30-40% decline in the number of entry level jobs in the first four months of lockdown. However since August, there has been almost 5% steady growth in entry level jobs, which is the silver lining for the entry level aspirants. Also, the hiring for senior roles remained unaffected and that is reflected in the 15% spike in hiring for senior roles between April and November.
Contractual hiring is coming to the salvation of these cash tight startups as they tend to refrain from hiring for full time.
At the starting of lockdown, Travel and Hotel reimbursements declined by 90% and 74%, respectively and Food and Fuel saw a decline of 83% and 60% in an attempt to extend the cash runways by a few months.
The expense like telephone and internet reimbursements have seen an increase as startups strive to make remote working easier. Post eight months, we can see on the base of strong signs of recovery that the startup ecosystem will positively get back on its feet.