Auto Vendors Warn Layoffs and Salary Cuts Amid COVID-19 Lockdowns

Auto vendors have warned that they would lay off 20% workers besides not paying April and May salaries to the employees in case assembling of vehicles in the country continues to remain shut for more months.

The countrywide lockdown is expiring on 9th May but it is unclear whether the government would extend it or ease it despite rising deaths related to coronavirus. However Sindh government has already indicated that the lockdown will continue towards the end of the holy month of Ramazan, which means major businesses & industries (in Sindh) will likely remain shut towards the last week of May 2020.

Related: Auto Assemblers Seeking Stimulus Package from Government

However, leading Japanese assemblers are yet to show the exit gate to their workers and staffers despite production closures since the 23rd of March. It is also being reported that no vehicle sales have been made since then due to COVID-19 lockdowns.

On the contrary, vendors of automobile assemblers are in a dilemma as they are mainly dependent on sale of locally made vehicles. Chairman PAAPAM (Pakistan Association of Parts and Accessories Manufacturers Association) Mohammad Akram while speaking to Dawn, said:

“We may have to reduce at least 20% workforce in the coming months in case lockdown extends from 9th May. Our members have paid full March salaries but majority of them will either cut them by 50-60% for April or be unable to pay salaries.”

Akram mentioned that vendors had already laid off 50% of workers since July 2019 prior to the coronavirus outbreak, as the sector had posted a sharp decline in sales especially over a 40% drop in passenger car volumes. He urged the federal government to intervene urgently to resolve this issue as, in view of the prolonged lockdown, it would be impossible for the industry to pay salaries and wages for April and onwards.

Related: COVID-19 Poses Greater Threat to Local Auto Sector

The PAAPAM chairman called upon the government to create a special fund to directly pay salaries and wages to the employees of the small and medium enterprise sector from 1st April until lockdown ends. The SBP relief packages are primarily focused on deferral of Long-Term Financing facilities while PAAPAM members are mostly using short-term facilities on which no relief has been announced. Furthermore, the chairman said the SME Utilities bill package has a coverage of 7KW to 70KW, which means PAAPAM members aren’t covered as most have installed power ranging between 100KW and 400KW.

From Dawn

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