Nepali firms lay off nearly quarter of employees as COVID-19 affects businesses

Aug 06, 2020

Nepali firms lay off nearly quarter of employees as COVID-19 affects businesses

Kathmandu (Nepal), Aug 6: Nepali business enterprises have laid off nearly a quarter of their workforce as the nearly four-month lockdown imposed to prevent the spread of the COVID-19 pandemic led to the shutdown of over 60 percent of the industries completely, according to a survey conducted by Nepal's central bank.
The Nepali government enforced the nationwide lockdown on March 24, closing most of the industries, business activities and halting ground and air travel, before lifting the restrictions on July 21.
Business activities slumped sharply during the period. As many as 61 percent of industries and businesses were shut completely, according to the survey conducted among 674 entrepreneurs involved in 13 different industrial groups in 52 out of Nepal's total 77 districts.
According to the survey report titled "The Effect of COVID-19 in Nepal's Economy," which was released on Wednesday, the surveyed enterprises laid off 22.5 percent of their employees. "Two-thirds of laid-off employees were either working on a contract basis or were hired temporarily," the report said.
The hotel and restaurant industry laid off most of its employees during the lockdown period, followed by small and medium scale enterprises, according to the report.
"The survey showed that the biggest impact of the pandemic has been on the hospitality sector and small and medium enterprises," Gunakar Bhatta, spokesperson at the Nepal Rastra Bank, central bank of Nepal. "Based on the survey result, we prepared the monetary policy basically targeting to provide relief to the most affected sectors."
According to the monetary policy for fiscal year 2020-21 that began on July 16, the Nepali central bank has allowed the most affected sectors, including tourism and aviation, to delay payment of their loans installment from mid-July this year to mid-July 2022. Other sectors have also been allowed to delay payment of their loans.
The worst affected sectors can also get credits from banks and financial institutions at just 3 percent interest rate while micro, small and medium scale enterprises can get credit at interest as low as 5 percent. Currently, the normal interest rate in Nepali market is around 10 percent, according to the central bank.
According to the survey report, industries and business enterprises have slashed the salary of the employees by 18.2 percent on an average with hotels and restaurant sector cutting down the salary of their employees by as high as 36.4 percent.
After the Nepali government ended the lockdown, the Himalayan country has been witnessing resurgence in the COVID-19 cases. As of Wednesday, Nepal has reported 21,390 COVID-19 cases with 63 deaths, according to the Ministry of Health and Population.
Source: Xinhua News Agency