Coronavirus Pandemic Impact: Here comes the pay chop | The Business Standard
Skip to main content
  • Home
  • Economy
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Splash
  • Features
  • Videos
  • Long Read
  • Games
  • Epaper
  • More
    • COVID-19
    • Bangladesh
    • Infograph
    • Interviews
    • Offbeat
    • Thoughts
    • Podcast
    • Quiz
    • Tech
    • Subscribe
    • Archive
    • Trial By Trivia
    • Magazine
    • Supplement
  • বাংলা
The Business Standard
TUESDAY, MAY 24, 2022
TUESDAY, MAY 24, 2022
  • Home
  • Economy
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Splash
  • Features
  • Videos
  • Long Read
  • Games
  • Epaper
  • More
    • COVID-19
    • Bangladesh
    • Infograph
    • Interviews
    • Offbeat
    • Thoughts
    • Podcast
    • Quiz
    • Tech
    • Subscribe
    • Archive
    • Trial By Trivia
    • Magazine
    • Supplement
  • বাংলা
Here comes the pay chop

Economy

Mahfuz Ullah Babu & Kamran Siddiqui
06 May, 2020, 11:00 pm
Last modified: 07 May, 2020, 11:28 am

Related News

  • Beijing urges millions to keep working from home amid Covid outbreak menace
  • Saudi Arabia bans travel to India, 15 other countries over Covid outbreaks
  • Dynamic zero-Covid approach: China's choice to safeguard lives, underpin economic growth
  • Thousands of Covid-negative Beijing residents sent to quarantine
  • Shanghai inches towards Covid lockdown exit, Beijing plays defence

Here comes the pay chop

Companies are trying to survive by slashing pay and reducing employees

Mahfuz Ullah Babu & Kamran Siddiqui
06 May, 2020, 11:00 pm
Last modified: 07 May, 2020, 11:28 am
File photo
File photo

Ahmad (not his real name), a middle-aged corporate executive in Dhaka, was contributing to aid initiatives at the beginning of April this year. He along with some of his friends was helping daily wage earners who had become jobless because of the nationwide shutdown put in force to control the Covid-19 outbreak. 

Within three weeks, the father of two began to fear himself to be on the flip-side as he saw the prospect of job loss after his company decided to cut costs amid declining revenue.

Meanwhile, Adnan (not real name) -- a young man with a business administration degree from an expensive private university -- joined a new luxurious hotel six months ago. Early last month, he was asked not to come to work until further notice.    

The Covid-19 pandemic has exposed lakhs of private sector employees like Ahmad and Adnan in the country to sudden job losses, salary cuts, layoffs and forced unpaid leaves.

Private companies -- be it garments, consumer goods, tourism, building materials, media and many more sectors -- have been announcing pay and job cuts in response to sliding revenues in this dismal economy.

These people who live on their monthly salaries are at risk of being cornered further as their expenses for house rents, kids' education, and food have not gone down at all.

RFL of Pran-RFL Group which is the leader in consumer durable plastic products has instructed its team leaders to list half of their 40,000 employees. Many of them will end up with no jobs.

According to RFL officials, they have got their salaries for April but they are in fear of job cuts in May as the sales of their company have gone down drastically.

Meanwhile, a business group that has diversified its business has decided to cut jobs and pay by 30 percent from its garment backward linkage industries.

A financial daily that has a good pay track record has announced a 20 percent pay cut for April, but it has promised to pay back the amount once normalcy returns. Employees of the media outlet can breathe a sigh of relief as they would be paid the Eid festival bonus.

"Owners are cutting payments as their revenue has declined. But how will I meet my expenditures?" said Aminul Islam Shohag, a mid-level executive of an export-oriented packaging factory.

"Will my landlord take less house rent or will the school authorities waive fees for my two kids?" he wondered.

Farhad Hossain who works in a brokerage house in Dhaka Stock Exchange lives in anxiety as he is yet to get his salary for April. Like Farhad, many of over 5,000 employees working in around 250 brokerage houses did not get their April pay and they are not sure about May as well.

The ongoing worldwide onslaught of the pandemic has also badly impacted all business sectors in Bangladesh. The private sector is trying to offset the revenue losses by cutting costs, and the employees are the first victims.

According to the Bangladesh Society for Human Resource Management, there are 70-80 lakh private sector executives and staff in Bangladesh.  

Md Mashequr Rahman Khan, president of the organisation told The Business Standard, "We have 4,000 society members managing human resources across industries and we are being told about too many disturbing news."

He said a large number of employers are not paying their employees their due amount.

Khan, also a member of the Asia Pacific Federation of Human Resource Management, strongly opposes the popular idea to dump all the business uncertainties on human resources which should rather be treated as human capital.

The organisation has also written to the prime minister on this issue and requested her to take necessary actions.

The BSHRM has requested the government to include private sector executives and staffs' salaries into the scheme of concessional loans, alongside wages to workers, as the officials and beyond-production floor staff are dignified enough not to seek aid.

Citing that labour laws in all the neighbouring countries include company executives and staff as labours to protect their rights, the organisation recommends immediate circulars to amend Bangladesh Labour Act, 2006 and transform it into "Labour and Employment Act" later. 

The decimations across industries

Several weeks' follow up of over a hundred companies has let The Business Standard learn that only a few corporate groups with strong balance sheets, or with a humanitarian approach are yet to consider cutting expenses by firing employees.

Shallow-book small or mid-size companies and startups with dependency on only cash flow, and companies with high debt burden or with business models too are exposed to the ongoing shocks and are worried that they cannot afford the same payroll.

In Bangladesh, companies with business models that might not allow them to recover soon even after the pandemic situation eases are more open to discuss payroll cuts. Ride sharing, tourism and hospitality are some such industries. Meanwhile employees at private hospitals and educational institutions are already feeling the pinch from the pandemic as they have been informed of pay cuts already. 

A large business conglomerate having operations in services, media, engineering, real estate, and beverages industries is paying the full salary to its factory workers for April, but has decided on up to 50 percent pay cut for factory managers and professionals like engineers and accountants. Executives at the head office of the company are yet to receive any such notice but they fear they are next. 

Besides, a four-decade-old group present in the automobile and real estate market has already decided for a progressive 10 to 50 percent pay cut across its companies to save 20 percent of salary expenses. The management also hints on firing employees.

On the other hand, a comparatively new real estate giant with a high debt burden is working on its plans for a 50 percent payroll cut – likely through a combination of both pay and job cuts, according to insiders.

A number of small and mid-size companies across industries are already in mutual agreement with employees for pay cuts, ranging from 10 to 50 percent, for April. Some are sending a portion of their teams on leave without pay.

Sources across industries say that temporary workers under master roll have already been eliminated in April, while a large number of permanent workers are being laid off with partial payments, in some cases delayed or even no pay.

It now seems it's now the executives' turn to go jobless, most likely silently, they hint.

RFL Managing Director RN Paul who sent the job cut announcement email in early-April, however said on Saturday, "The email was a miscommunication and we are not going to fire anyone during the crisis.''

The group would rather reorganise teams for better output in the disruptive business environment, he said. 

Paul said the conglomerate would fill gaps in any of its businesses through better focusing on emerging opportunities home and abroad.

Meanwhile, Shahid Hamid, executive director of Dhaka Regency hotel, said, "Although we have not fired any employees, we are considering partial salary. Bonuses for the upcoming Eid will not be paid either."

Whom to save first?

A finance manager of a big company said, "It is a dilemma whether to save the company or the human resources in the first place."

"It will take up to the second or third week of May for reality to hit as companies need to decide on Eid bonuses followed by the payment of April's salary," he said.

One month of shutdown means a loss of over eight percent of annual revenue, and companies are trying to offset that by not paying Eid bonuses. Paying the two Eid bonuses cost 20-25 percent of the entire annual payroll expenses, he added.

A Bangladeshi chartered financial analyst working for a foreign investment group said no one knows the exact depth and extent of the pandemic and its economic effect. Hence, his headquarter suggested to anticipate a slowdown over the next 12-18 months.

"Paying employees from reserve is a noble idea only if it is for a certain time bearable by the company. But when the cycle of negative cash flow is really unknown, the approach may reduce a company's future capability to pay salaries and wages," he said.

Companies in the developed world, during their economic bust times, are experienced with such cost cutting measures for survival. But this is a new experience for Bangladeshi business groups when almost all their businesses are going down simultaneously. 

"Prudent management will let neither the company nor its human resources go broke. The two must find a win-win solution," concluded the investment expert.

Top News / Covid-19 in Bangladesh

COVID-19 / Coronavirus / salary / cut

Comments

While most comments will be posted if they are on-topic and not abusive, moderation decisions are subjective. Published comments are readers’ own views and The Business Standard does not endorse any of the readers’ comments.

Top Stories

  • Corporates go cashless…tax cut on cards
    Corporates go cashless…tax cut on cards
  • Rising revenue collection a false dawn, economists say
    Rising revenue collection a false dawn, economists say
  • Why we must resist geoeconomic fragmentation—and how
    Why we must resist geoeconomic fragmentation—and how

MOST VIEWED

  • Inflation jumps to 6.29% in April
    Inflation jumps to 6.29% in April
  • BPC hunts for dollar to import fuel oil
    BPC hunts for dollar to import fuel oil
  • Infographic: TBS
    Businesses reel under soaring costs
  • Representational Image. Photo: Wikipedia
    European buyers back AP Møller-Maersk to run Patenga Container Terminal
  • Representational Image. Photo: Mumit M/TBS
    Govt to list products to suspend imports amid dollar crisis
  • Bangladesh may face debt distress from 2032: Economic Association  
    Bangladesh may face debt distress from 2032: Economic Association  

Related News

  • Beijing urges millions to keep working from home amid Covid outbreak menace
  • Saudi Arabia bans travel to India, 15 other countries over Covid outbreaks
  • Dynamic zero-Covid approach: China's choice to safeguard lives, underpin economic growth
  • Thousands of Covid-negative Beijing residents sent to quarantine
  • Shanghai inches towards Covid lockdown exit, Beijing plays defence

Features

Musk is denying the sexual harassment allegation that surfaced this week. Photo: Bloomberg

Elon Musk’s crazily banal week 

14h | Panorama
Asus Zenbook 14 Flip OLED: A touch of brilliance to your life

Asus Zenbook 14 Flip OLED: A touch of brilliance to your life

17h | Brands
Keep your phone by your side with this armband

Keep your phone by your side with this armband

14h | Brands
Are Focallure gel masks worth the hype?

Are Focallure gel masks worth the hype?

16h | Brands

More Videos from TBS

Why are Duranta TV shows popular?

Why are Duranta TV shows popular?

9h | Videos
Donbas is hell, says Zelenskiy

Donbas is hell, says Zelenskiy

10h | Videos
Threat of Monkeypox on the horizon

Threat of Monkeypox on the horizon

11h | Videos
Mosque of Mughal period in Gazipur

Mosque of Mughal period in Gazipur

11h | Videos

Most Read

1
Tk100 for bike, Tk2,400 for bus to cross Padma Bridge
Bangladesh

Tk100 for bike, Tk2,400 for bus to cross Padma Bridge

2
A packet of US five-dollar bills is inspected at the Bureau of Engraving and Printing in Washington March 26, 2015. REUTERS/Gary Cameron
Banking

Dollar hits Tk100 mark in open market

3
Bangladesh at risk of losing ownership of Banglar Samriddhi
Bangladesh

Bangladesh at risk of losing ownership of Banglar Samriddhi

4
PK Halder: How a scamster rose from humble beginnings to a Tk11,000cr empire
Crime

PK Halder: How a scamster rose from humble beginnings to a Tk11,000cr empire

5
BSEC launches probe against Abul Khayer Hero and allies
Stocks

BSEC launches probe against Abul Khayer Hero and allies

6
The reception is a volumetric box-shaped room that has two glass walls on both the front and back ends and the other two walls are adorned with interior plants, wood and aluminium screens. Photo: Noor-A-Alam
Habitat

The United House: Living and working inside nature

The Business Standard
Top
  • Home
  • Entertainment
  • Sports
  • About Us
  • Bangladesh
  • International
  • Privacy Policy
  • Comment Policy
  • Contact Us
  • Economy
  • Sitemap
  • RSS

Contact Us

The Business Standard

Main Office -4/A, Eskaton Garden, Dhaka- 1000

Phone: +8801847 416158 - 59

Send Opinion articles to - oped.tbs@gmail.com

For advertisement- sales@tbsnews.net

Copyright © 2022 THE BUSINESS STANDARD All rights reserved. Technical Partner: RSI Lab