Among the multifarious negative effects of the shutdown, the loss of livelihood is the most harrowing. Unemployment affects not only the inner and outer circle of the person but also the entire nation and her economy. We might be saved of the infection to some extent due to this but a long night is waiting for us after the dusk of Covid-19.
According to an analysis done by Lightcastlebd, the Micro, Small, and Medium Enterprises (MSMEs) sector accounts for 25 percent of the total GDP. Bangladesh has around 10 million SMEs employing around 18 million people which is 25 percent of the entire workforce.
Not only because of its huge share in the GDP, but in a populous country like ours a labour-intensive sector like SME is very important. But this section of the economy is the most vulnerable due to its functioning on a short cash cycle, lack of finance and disruption in the supply chain.
Mass layoffs in this sector in the future is quite certain. Many SMEs are cutting corners to survive. Lack of scope to sell products or services have halted business operations as consumers have become stringent towards spending.
Additionally, the cash reserves will run dry soon and the government stimulus package of Tk 50 billion, which is concentrated towards the export-oriented SMEs, will not be enough to cover this decline. However, the initial cuts will be seen in marketing and rents, but eventually will lead up to layoffs.
Among our neighbouring countries, Thailand is protecting their SMEs by a stimulus package worth $15.4 billion, to protect their tourism industry.
The USA, according to Vox, has also failed to stop unemployment. Their unemployment insurance system is well suited for a mild recession but when all the companies start laying off their employees, that system will not be able to hold for long.
On the other hand, the UK did something different to stop this misfortune. According to a Guardian report, workers get paid 80% of their salaries and businesses get help to cover their rents and utilities from the government so that after everything becomes normal again they can get back to work. The same thing was initiated by the Canadian government as well.
All of this is only a precautionary measure for the inevitable unemployment rise. Since this cannot be stopped, following how Airbnb handled the situation admirably could be a possible band-aid solution for these SMEs or startups in Bangladesh.
Airbnb's take on the whole situation is worth mentioning here. Silicon Valley could not remain immune to mass layoffs. According to Guardian report, about 375 startups have laid off more than 42,000 employees since 11 March 2020.
But Airbnb's efforts to a smooth layoff matches none. With a 1,694-word note to his employees, chief executive Brian Chesky announced the layoff in Airbnb's blog.
This layoff constituted of an unusual severance package, including an alumni talent directory, help from recruiters to get the workers new jobs, 14 weeks of base pay, one additional week for every year at Airbnb, health security and much more.
This not only helped the ones gone but also showed Airbnb's sincerity and concern towards their employees.
The unprecedented effects of Covid-19 cannot be overturned and some effect in its aftermath is unavoidable. But the process and severity of the layoff situation can certainly be lessened.
The question now is, whether this is reversible or the unemployment rise is here to stand for long?