As coronavirus pandemic stare the country in its face, there are some big wigs who rather than making things better are now looking at cutting salaries, laying off employees, and resorting to similar ways. After major corporations, it is Reliance Industries Limited that has announced a pay cut for its employees. Whereas, nothing of these sorts has come from Infosys, TCS, etc. During this unprecedented pandemic, a multi-dollar company like Reliance Industries Limited doing pay cuts is indeed worrisome; other companies will follow the trend leaving thousands affected.
In view of the coronavirus pandemic on the demand for fuel, some employees of the Reliance Industries Ltd will bear a 10 percent cut in their salaries, the company has announced. The industry's hydrocarbon division will be impacted. This, however, has irked netizens as they face harsher times in the days to come.
Reliance Industries is India's largest industry and announcing a pay cut at this time means other companies and smaller industries will follow suit. A lot of startups and businesses have taken a severe hit from the lockdown, but they lack a strong long-term plan much like the giants of the industry.
The industry's head Mukesh Ambani, chairman of the Reliance Industries, has decided to forego all his remuneration. But most of the employees of RIL will see a salary cut by 10 to 50 percent. The company paid annual cash bonus and performance-linked incentives in the first quarter and this also stands deferred as of now.
Demands for everything has gone severely down due to the nationwide lockdown that began on March 25 as factories shut down, offices closed, air flights suspended, trains stopped and restrictions on the movement of people and goods placed but at the same time the Prime Minister had urged all those who have people working for them to show concern and not to cut salaries during this crisis. This has been a period of a lull for the economy and such measures will spell doom for people working for various companies.
Reliance pay cuts don't affect everyone
Reliance board of directors, including executive directors, Executive Committee (EC) members, and senior leaders will forgo 30 to 50 percent of their compensation. Those employees with compensation of less than Rs 15 lakh will have no reduction in compensation but those earning higher than that could see a 10 percent reduction in fixed pay.
The fact that RIL's pay-cut affects top-level management, the move is applauded by many at the same time. But it doesn't set a positive tone for Indian businesses that look up to companies like RIL for inspiration.
For being the chairman and the managing director of India's largest company, Ambani draws Rs 15 crore in annual compensation. His salary has remained unchanged since 2008-09, forgoing over Rs 24 crore per annum.
Recovery amid an economic slowdown
A letter that was circulated by the company stated that the company would "closely monitor the economic and business environment," and re-evaluate its response to the situation on a continuous basis "to improve the earning capacity" of the business.
The lockdown period, on the other hand, has provided numerous prospects to reorganize and digitalize business processes to produce considerable improvements in output, effectiveness and costs.
The letter said, "Together, we will embrace these opportunities and work towards restoring our compensation levels to normalcy."
However, it was not clear whether other Reliance divisions have also taken the blow. But sources were quoted as saying that the company's telecom unit, Reliance Jio Infocomm, did not appear to have been impacted as of Thursday.
