70% of MSMEs intend to reduce headcount to save businesses: AIMO survey

Over 70 per cent of micro, small and medium enterprises (MSME) might reduce their employee count in order to save their businesses and get back on track, according to a survey conducted by the All India Manufacturers Organisation (AIMO).
 

The survey's result, the second part of the survey series conducted by AIMO amongst the corporates, MSMEs, self employed persons and others, was based on the responses from 46,525 participants.

The survey was conducted in association with Digitally 4 Empowerment (D4E) a Social Tech Enterprise and other trade bodies like Federation of India Industry (FII), Association of Indian Industry (AII), Cement Manufacturers Welfare Association (CMWA), Consortium of Women Entrepreneurs of India (CWEI), Federation of Indian Women Entrepreneurs (FIWE),First World Community (FWC), Chamber of Small Industry Association (COSIA), Federation of Small and medium Industries (FOSMI), and Amausi Industries Association, Lucknow (AIA).
 

K E Raghunathan, Immediate Past President, AIMO said that 72 per cent of MSMEs responded that they would definitely reduce their head count.

"In fact only less than 20 per cent of the all the categories said they would continue with the same headcount. The extent of the job loss will be clear by the end of August 2020, as most of the respondents were in the process of gauging how many of their employees will return and the optimum employee strength required to sustain their business in the near future,” he added.

“On the issues likely to be faced during 'unlock' period which began this week, the survey covered various aspects such as demand forecast, collection of pending dues, raw materials, future EMI payments along with present interest burden and salary issues. Sadly, the biggest concern of 36 per cent of the self-employed was their ability to pay EMIs as they had issues with pending payments for work done earlier and also the receipt of new orders and a profitable price for the business,” said Radhakrishnan, treasurer of AIMO.
 

"The job market has also tanked with most companies freezing their recruitments for the near term. The future of their livelihood and the existence of the families that depend on them is in a very precarious position for most of the MSME entrepreneurs," he added.
 

The corporate respondents, however, had a slightly different set of perspectives, with 22 per cent citing manpower concerns, 22% expressing concerns on sourcing of raw materials and price management and 23% expressing concerns over new orders for the next three months.
 

Distribution of raw materials to the MSMEs through government undertaking National Small Industries Corporation (NSIC) through a model similar to a public distribution system on credit and at reasonable prices could help the industry solve many of the issues it faces, suggested the participants. They have also asked the government to allow banks to accept bill discounting facility for all sales invoices raised in the next three months , irrespective of the party being billed, said the organisation.