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As India’s factories cautiously reopen after more than a month of lockdowns, some business owners are mulling the use of more technology and less labour

New Delhi, India: The coronavirus pandemic has forced Ashutosh Jatia to make a decision he had been putting off for years: whether to replace workers at his factory in the Indian capital making electrical insulators with machines.

He fears a future in which a prolonged pandemic leads to a shortage of labour and higher running costs due to the need for more sanitisation, he tells Al Jazeera.

Cheap labour, which had so far given his business “an edge” by helping to keep costs down, “now seems to have turned into a liability due to the same labour being prone to viral diseases,” says Jatia. His solution: reduce the use of manual labour.

The virus is forcing many businesses around the world to make uncomfortable choices about their workforce. But mass layoffs in India could end up damaging what was already a deeply flawed labour market. The International Labor Organization estimates that more than 90 percent of jobs are in the so-called informal sector, comprising low-paid work with few if any benefits such as paid leave, healthcare or even formal contracts.

India, once the fastest-growing major economy, was already seeing its slowest pace of economic growth in a decade before the outbreak of the novel coronavirus, which has dealt a further blow to its economy and, in turn, to people’s ability to find jobs.

The country imposed a lockdown on March 25, the largest and toughest in the world, which, after an initial period of three weeks, has been extended until May 17.

Only the movement of essential goods and a handful of sectors like agriculture are allowed to operate, except for a partial lifting of restrictions in the least-affected areas.

The moves have had a dramatic impact on jobs, while economists revise down their economic growth estimates as the lockdown continues.

In a report released on April 7, before the extension of the lockdown was announced, Goldman Sachs predicted that India’s economy in the current financial year, which ends next March, would grow by 1.6 percent, down from an earlier expectation of 3.3 percent.

That would make it India’s worst slowdown since the 1970s, Goldman said.

“The nationwide shutdown, and rising public anxiety about the virus, are likely to lead to a sharp deterioration in economic activity,” the report said.

A week later, banking and investment firm Barclays had an even more dire prediction when it cut the country’s economic growth rate to flat in the current calendar year which ends in December, down from an earlier expectation of 2.5 percent.

For the current financial year, it now predicts the economy will grow by just 0.8 percent, from its earlier 3.5 percent projection.


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