Small and medium units face new challenge

Several entrepreneurs are unable to pay their employees festival advance and bonus

With the festive season drawing near, businessmen and entrepreneurs in the Micro Small and Medium Enterprises (MSME) sector are facing a new challenge: paying their employees festival advance and bonus.

With trade yet to revive and reach pre-COVID-19 levels, businessmen are worried. While some units are requesting their employees for more time, the others are giving a fraction of the amount.

K.E. Raghunathan, convener of the Consortium of Indian Associations, said two things happen in the sector during Ayudha Puja — a bonus is given, almost one-month salary, and a request for salary advance, which is another one-month salary. The money given varies from company to company and depends on the number of years an employee has worked.

“Currently, almost 70% of MSMEs have no additional cash left. EMI pressure is quite high. Most of the entrepreneurs paid money during non-working days during the lockdown,” Mr. Raghunathan said. With no relief from the State or the Centre, payment of bonus and salary advances are going to be a big challenge…,” he added.

The head of an MSME unit in Coimbatore said he would be able to give only 50% of the bonus. Only 60% of his workforce resumed work, while the others were yet to return from their respective States. “I’m already paying salaries (a certain amount) to the migrant workers who are yet to return. If I don’t pay, they will not come back,” he said, adding the order inflow was yet to pick up.

“Being a small-scale industry, we want to retain our staff. So we are planning to give 50%-60% bonus,” said K. Baskaran, secretary of the Kakkalur Industrial Estate Manufacturers Association. He said business was picking up, but there was a huge manpower shortage.

R.G. Chakrapani, secretary of the Thirumazhisai Industrial Estate, said only some segments were doing fairly well. Among them were two-wheeler, small car, tractor-based units. Some were exporting spill-over orders. “The companies which are catering to these segments are planning to pay 8.33% (one-month salary) in bonus. Other companies are planning to pay 50% of the 8.33% for Deepavali and 50% for Pongal.”

A. Shanmugavelayutham, who runs electrical transformer manufacturing units in Guindy Industrial Estate and Thirumudivakkam, said, “Many units are wondering how to pay bonus. But I have decided to pay my employees and I’m working on a formula.”

Mr. Shanmugavelayutham said raw material costs had increased suddenly, casting a burden on the sector.

At the Ambattur Industrial Estate, the business is better since many units are supplying to the automobile sector. Orders are coming in for these companies, but payments are getting delayed.

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