SME Times News Bureau | 20 Oct, 2020
per cent MSMEs and startups in India have reduced workforce in the last 8
months since the Covid-19 pandemic broke out.
As per a survey by LocalCircles, only 22 per cent startups and MSMEs have the
same or increased workforce as compared to the pre-Covid levels.
India's startups and MSMEs ecosystem went through a torrid time due to the
Covid-19 pandemic and the following lockdown. With revenues and operations
getting impacted for most businesses, many end up cutting costs and some even
shut down temporarily or permanently. Per CMIE, 6 million Indians had already
lost white collar jobs in the March - August period.
LocalCircles conducted a survey to understand the startup and MSME pulse on
their workforce adjustments due to Covid. The survey received over 7,000
responses from startups, MSMEs and entrepreneurs spread across 104 top business
districts of the country.
In the survey, startups and MSMEs were asked about how have workforce
adjustments taken place in their business during the Covid-19 pandemic. In
response, 25 per cent said their business has shut down and all workforce has
been let go, while 15 per cent said their workforce has reduced by 50 per cent
A 19 per cent said their workforce has reduced by 25-50%, and another 19 per
cent said their workforce has reduced by up to 25 per cent. A 6 per cent said
their workforce has increased and 16 per cent said they have same workforce as
pre Covid-19 time.
This shows that 78 per cent MSMEs and startups in India have reduced workforce
in the last 8 months since the Covid-19 pandemic broke out and only 22 per cent
startups and MSMEs have the same or increased workforce as compared to the
The Government also took steps to help these small businesses through the
Atmanirbhar Bharat scheme, but its advantages per feedback from businesses in
July this year has been quite limited, the survey said.
In 2017, the Indian Government passed the Maternity (Amendment) Bill that
increased the right to paid maternity leave for working women from 3 months to
6 months - the third highest in the world. Although this was great news for
nursing mothers, a ripple effect of this decision was noticed in many small
businesses who reduced hiring of women in their organizations, purely due to
financial reasons and the cost of funding maternity leave benefits. Though the
Government came back and moved a proposal allowing companies to file
reimbursement of 7 of the 26 weeks of maternity pay, there were few takers
amongst small businesses.
Startups and MSMEs were asked about how employment of women has been in their
business 8 months into the Covid-19 pandemic. In response, 7 per cent said
women in their workforce have been reduced by 50-100 per cent, 12 per cent said
women in their workforce have reduced by 25-50 per cent, and 12 per cent said
women in our workforce have been reduced by up to 25 per cent. 46 per cent said
they still have same number of women in the workforce as pre Covid-19. Not a
single business reported increase in the number of women employees during the
course of the 8 months of Covid-19 pandemic.
This means that 31 per cent MSMEs and startups in India have reduced women
workforce in the last 8 months. The Labour Force Participation Rate (LFPR)
among women in India, is one of the lowest in the world and appears to have
slid even further during the Covid-19 pandemic.
In the final question, startups and MSMEs were asked looking at the next 6
months, how do they see employment of women in their business. In response, 50
per cent said they don't plan to hire any women employees while 30 per cent
said they plan to hire 1-5 women employees. 13 per cent said they plan to hire
6-10 women employees and 7 per cent were unsure about it.
So while the last 8 months of the pandemic have been tough from the perspective
of new employment of women with small businesses, the 6 month outlook does look
a bit better. With growth coming back in many sectors, and given that Work from
Home has become a new normal for many of the technology driven businesses and
for white collar jobs, even in traditional businesses, it is likely to help
more women find job opportunities in the coming months, the survey said.