Yes, Madam is currently experiencing online backlash for purportedly terminating over 100 employees who reported experiencing increased work-related stress during a mental health survey conducted by the organisation. Anushka Dutta, a former copywriter at Yes Madam, vented her annoyance on LinkedIn, writing, “What’s going on at Yes Madam? You randomly survey us first, and then you fire us overnight because we’re stressed. Not only that, but 100 other people have also been let go. Additionally, Dutta sent a screenshot of the email the company’s human resources (HR) department issued regarding the layoffs.
The email shockingly claims that the terminations were made in order to keep workers from working under pressure. As an organisation dedicated to creating a safe and encouraging workplace, it has given considerable thought to the suggestions. The email stated that the company had taken the difficult decision to fire individuals who expressed a great deal of stress in order to make sure that nobody was left feeling overwhelmed at work.
Company Received Strong Criticism Online
After receiving more than 6,400 likes and 1,300 comments, these LinkedIn posts swiftly gained widespread attention. Yes, Madam, was criticised in the majority of the comments and new posts, which described the situation as “terribly stressful and (a) disturbing news.”
Furthermore, some users referred to the widespread layoffs as “unethical” and demanded that the nation’s labour rules be strengthened. Some people, however, were quick to doubt the incident’s veracity and speculate that it might be a marketing ploy. If this were a publicity trick, a netizen said the corporation had “literally stooped low.”
Nevertheless, this is not the first instance in which Yes Madam has encountered turbulent waters. Due to a server-side setup error, the firm was criticised last year for allegedly disclosing the private information of its gig workers and clients.
What MediBuddy and CII Survey Reveal About Mental State of Working Class?
The development coincides with other data indicating that Indian workers are experiencing significant levels of stress. About 62% of Indian workers suffer from work-related burnout, which is much higher than the global average of 20%, per a survey by MediBuddy and the Confederation of Indian Industries (CII). According to a different World Health Organisation (WHO) report, 15% of working-age persons suffer from anxiety disorders, and over half of the world’s population is currently employed.
YesMadam’s Financial Dynamics
Yes Madam is a home-based salon startup that was founded in 2016 by twins Aditya and Mayank Arya. BigStylist, GetLook, Biguine India, Belita, ZapLuk, MakeO, and Urban Company are its competitors. Aman Gupta, Vineeta Singh, Peyush Bansal, and Ritesh Agarwal, four investors on the popular TV show Shark Tank India, agreed to invest INR 1.5 Cr in the home salon firm in February. Regarding finances, Yes Madam recorded operational revenue of INR 27.04 Cr for the fiscal year 2022–2023 (FY23), which was over 26% more than INR 21.48 Cr for the same period last year. The Delhi NCR-based business previously told Inc42 that its FY24 sales were INR 45 Cr. In contrast, losses in the fiscal year under review increased by just 3% year over year (YoY) to INR 6.36 Cr from INR 6.15 Cr in FY22.
As part of its attempts to increase profitability and reduce unnecessary expenses, finance influencer Sharan Hegde’s 1% Club has laid off 15% of its employees. In a LinkedIn post, Hegde stated that he recently let go of 15% of his employees and that he had received numerous messages from friends and the media asking if he was going bankrupt. The irony is not lost on him as a finance guru who made financial education the cornerstone of his business.
Hegde did not specify how many workers were impacted; however, a Reddit user stated that about 40 workers were let go.
Sharan Hedge Discusses the Financial Results of 1% Club
Hegde’s LinkedIn post states that 1% Club has a strong EBITDA margin of 35–40% and generates about $8 million in annualised revenue. Hegde emphasised the company’s sound financial standing by stating that it has operated independently of outside investor funding.
He said that the client had placed INR 10 crore in a fixed deposit (FD) that was yielding an 8.5% interest rate. In October of last year, millionaire Nikhil Kamath’s Gruhas and Abhijeet Pai from the Puzzolana Group contributed INR 10 crore to the 1% Club. Additionally, according to Hegde, 1% Club has been creating new financial services and products that have already turned a profit and serve close to 85,000 active, paying clients.
What Caused the Layoffs?
The layoffs, according to Hegde, are a part of the startup’s first significant cost-cutting initiative since its founding. He disclosed that 1% Club, which started off with just five interns two years ago and currently has close to 200 employees, saw quick expansion that resulted in some hiring and operating expense inefficiencies.
“Two years ago, I launched this business in my bedroom with just five interns. Today, we employ about 200 people. It goes without saying that when you expand at such a rapid rate, you will inevitably make some hiring and unnecessary spending blunders,” he said.
This is the company’s first cost-cutting initiative since its founding. According to Hegde, the company has discovered substantial AI-driven cost savings that can increase efficiency and profitability and be put back into the expansion of the company.
Assistance for Impacted Workers
Hegde recognised the decision’s difficulty and the psychological toll it would take on the impacted staff. He stated that the 1% Club will continue to assist laid-off workers in locating new employment prospects and has provided substantial severance compensation depending on seniority.
One of the leading financial influencers in India, Sharan Hegde, has more than 3 million followers on social media, including more than 2.7 million on Instagram. The online platform 1% Club, which was co-founded by Raghav Gupta and Sharan Hegde, assists users in becoming financially independent. The startup offers masterclasses, financial planning tools, and teaching materials.
“Inflation”, you might have read or heard this word often in the Economic section of a newspaper or a news channel.
Inflation is one of the metrics to measure a country’s economy. It is a measure of the rate of increase in the pricing of goods and services.
Let’s say, in 2021, a kg of Apple was ₹100. In 2022, the price went up to ₹120. So, that would mean inflation of 20%.
In calculating a country’s inflation, many products and services such as housing, food, transportation, clothing, medical, and others are taken into consideration. Next, the prices of these products and services are taken into a group and the rate is calculated in percentage, keeping that year as a base year.
As the inflation rate increases, the cost of living will also increase. However, the average income remains constant.
This way, the majority of the country’s citizens may find it hard to balance the cost of living leading to a financial crisis.
So, what can be the possible causes of inflation? This article lists various causes of inflation and the consequences of worst-hit inflation.
Inflation can be caused because of various reasons with demand-pull and cost-push inflation being the most common. Besides this, a country’s economy can also be shocked due to various factors as discussed below:
As the name suggests, this effect is associated with the growing demand for goods and services. demand-pull inflation may occur when the demand is higher than the economy’s ability to meet those demands.
With increasing demand, the prices may rise and the consumers will have to purchase at those prices causing disbalance in the economy.
Take an example of a music concert. If the number of seats is less and the demand is high, the ticket prices would eventually be increased and sold to the ones who can pay for them.
Demand-pull inflation usually happens in a growing economy and is not always a negative sign. In fact, the Federal Reserve suggests that inflation of 2%-3% is considered healthy for the economy.
2. Cost-Push Inflation
This is one of the most common reasons for inflation and increasing prices. When the cost of manufacturing or raw materials increases, the companies will increase the product prices to meet the profits. This increases the burden on the consumers as the prices are controlled by the companies or the industry.
Cost-push inflation may happen if the government has increased the taxes on certain materials or the new laws have made imports or exports expensive.
The other possible reason could be the increase in taxes. If the government has hiked certain taxes that may affect the corporations, they are likely going to increase the pricing to meet the production costs.
Inflation Rate in India
3. Devaluation of Currency
Devaluation is defined as the lowering of a currency’s value, which then reduces the currency exchange rates. Devaluation affects inflation indirectly.
When the currency value lowers, the export rate becomes cheaper resulting in increasing exports to the foreign countries. Further, the import rate increases and the devalued country results in increased imported products.
As a result, the citizens turn toward domestic products, increasing the demand. When the demand surpasses the production, the cost increases, resulting in the demand-pull effect.
The recent economic crisis in Sri Lanka with an inflation rate of 17.5% is attributed to the devaluation of its currency.
An increase in the circulation of currency can be one of the major causes of inflation. Printing or circulating excessive money is never a solution to support the falling economy.
Printing more notes, cash, or coins that country’s economic growth is only going to devalue the currency and bring it down.
The lower the costs of export, the higher will be the dollars and foreign buyers.
Again, this results in demand-pull inflation increasing the costs of production. This, in turn, puts financial pressure on the citizens of the country resulting in higher prices and increased inflation.
One such example is Zimbabwe’s increased money supply in 2008. The country was already in debt when its government decided to increase the money supply.
Due to the increased circulation of currency, the demand skyrocketed resulting in a shortage of supplies. As a result, the cost of production increased and the suppliers had to raise the prices.
The government then tried to control the prices of basic goods, but this cost was much lower than the cost of production. And, the supplier wasn’t left with many production units.
In 2008, the country’s inflation rate reached a shocking 231,150,888.87% causing hyperinflation.
5. Wage Push Inflation
An increase in the average wages of the workers or employees can be a contributing factor to inflation.
Higher wages and the increased cost of production are tied in a circular loop. If the rise in wages is high, the companies will have to increase the costs of production or adjust to the lower profitability. This is a case of cost-push inflation. Now, if the wages are increased, the companies may cut off the employees and this will only increase unemployment.
That said, the general rise of wages to keep up with the increasing inflation will have put less pressure on the economy.
What are the consequences of Inflation?
As inflation continues to grow, it may affect your cost of living, investments as well as future retirement plans.
The increasing prices may reduce the consumer’s purchasing power cutting off the costs of living. In worst-hit inflation, the citizens may even fail to meet the basic necessities.
This would result in lower profits, higher layoffs, and an increased rate of unemployment. To combat this, the countries may seek loans from the World Bank, IMF, and other financial organizations.
Further, the growing economies may lend loans to the countries facing hyperinflation with higher interest rates. This may lead to higher debts and worsened inflation.
Conclusion
Inflation can make or break a country’s economic growth. Optimal inflation of 2%-3% is considered positive whereas the inflation rate of 50% or above in a month can result in hyperinflation.
The above-mentioned causes of inflation should be regularly checked by the government and the financial institutions in the nation. The balance between demand-pull and cost-push would bring stability to inflation.
FAQs
What are the 5 causes of inflation?
Demand-Pull Effect, Cost-Push Inflation, Devaluation of Currency, Increase in Money Supply, and Wage Push Inflation are the 5 causes of inflation.
What are the main causes of inflation in developing countries?
Government spending, money supply growth, world oil prices, and the nominal effective exchange rate are the main causes of inflation in developing countries.
LG is a South Korean company that was one of the leading manufacturers of mobile phones. The company has maintained the No 3 position in the manufacturing of the smartphones for a very long time. The company has been finding it hard to maintain its financial position and to increase the sales of the mobile phones amid the competitors.
Recently the company has announced that it is going to shut down the mobile phone business. Let’s look at why the company has decided to shut down its mobile phone business.
On 5 April 2020, LG had announced that it will shut down its mobile phone business. The South Korean firm LG had said in a statement that their Board of Directors had approved the decision to discontinue the business.
This unsurprising move from the company comes after its statement in the month of January, where LG had told that it was trying to review the direction of their smartphone business. The company has announced that it will close down its mobile business worldwide.
LG has become the latest legacy phone to exit the mobile phone making business. The company said that it will shut down its mobile phone business by the end of July.
The company has been struggling to compete with the global competitors such as Apple, Samsung, One Plus, and Xiaomi who dominates the mobile phone market. Apple and Samsung are the only brands that have maintained their sales over the years in this market.
Even the legacy phone brands such as Nokia and Blackberry have faced a lot of struggle and have lost their market domination. LG had failed to keep their products with the competitors and the new players are providing smartphones with better software and Operating systems at a reasonable price.
In 2007, LG was the fifth biggest smartphone maker globally. This was when the first iPhone was launched and went into sale. In the fourth quarter of 2020, LG couldn’t get ranked in the list of top whereas Huawei which is struggling because of certain US sanctions has managed to be in the fifth position.
LG Failed to make its mark
Over the past decade, it became harder to get consumer attention in mobile because of the growth of Android phones. LG had been experimenting with a lot of innovative designs in the last couple of years to attract the consumers.
LG continuously focused on two segments in the market which were high-end and mid-range smartphones. These two segments have become very competitive in the past decade because of the Chinese smartphone manufacturers such as Huawei, One Plus, Oppo, Xiaomi, and Vivo.
These companies have been releasing new models with software updates and the latest camera feature phones every often.
LG has told that it will continue to sell the smartphones as long as their already manufactured and stored inventory is exhausted. The company also said that it will continue providing services to their existing customers such as software updates, customer support, etc. for a period of time. They said that it would differ from one particular region to another.
On the request towards the company’s US business on how long will LG provide services to US customers did not receive any reply. A representative of AT&T has told that they are aware of LG shutting down their mobile phone business and added on saying that they would continue to support the people who use LG devices on their network as LG makes this move. This step is taken by AT&T as a commitment towards their customers.
Number of smartphones sold to end users worldwide
Future of LG Employees
It is said that LG will likely lay off some of their workforce. Some of them would probably be transferred to the other sectors of LG’s business. The company has a lot of employees around the world as it has phone manufacturing centers in China, Vietnam, and Brazil.
The company is trying to repurpose its manufacturing facilities to be used for the manufacture of other products. Even closure of these facilities is a possibility. They said that the status of their workforce that is involved in the phone business will be decided at their local level.
In the coming years, LG is planning to concentrate on leveraging their expertise in the mobile industry and to develop and work on building mobility-related technologies such as 6G to strengthen their competitiveness in various other business areas.
The company has plans to retain their core technologies that they had developed during the two decades of their mobile manufacturing business. The company is planning to apply it to their existing and future products.
The company has plans to focus more on its smart home products from smartphones. LG is one of the biggest providers of smart home products globally. The company is further planning to concentrate on electric vehicle components, Artificial Intelligence, robotics, business-to-business products, and other connected devices.
FAQ
What does LG stand for?
The company’s original name was Lucky Goldstar but it has become more synonymous with the company’s tag line “Life’s Good”.
Is LG going to stop making phones?
LG has released a statement saying that it is getting out of its mobile phone business to focus on other products and services.
Is LG is an Indian company?
No, LG is an South Korean multinational conglomerate corporation founded by Koo In-hwoi.
Conclusion
LG’s poor financial performance in their smartphone business and the information regarding it has been public for the past few years. Just like other legacy phones even LG has failed to retain in the mobile manufacturing business and to turn things around.
Since the World Health Organisation (WHO) has declared the Covid-19 or Coronavirus outbreak a pandemic, many companies are taking precautions against the impact and spread of the virus. The government also plans to close restaurants, bars and hotels nationwide along with non-essential stores. Companies are asking their employees to work from home for their safety. The Coronavirus outbreak has forced companies to slow or halt their physical operations, impacting production in the upstream sector. Meanwhile, downstream operations are upgrading their systems and pushing to work more flexibly. Many industries such as tourism, hospitality, retail, forestry and transport industry, etc. are facing great troubles. While many companies now allow their employees to work at home, telecommuting isn’t an option for many people. Restaurants also had to close except for pickup and delivery service. Also, vehicle manufactures Ford, General Motors and Fiat Chrysler are suspending production until the end of March.
But many people are unable to work due to the ongoing coronavirus pandemic as their job or work profile does not allow this work flexibility. This is just making employers cut the jobs as the employers cannot pay the wages. This situation is really severe in many countries. Now, the Coronavirus outbreak is resulting into huge lay-off which is again not a good sign. While there are state and federal measures coming to help those impacted financially, in the more immediate future people can file for unemployment benefits. While some employers are asking their employees to take unpaid leaves as a solution to this. This is all resulting into a global economic slowdown.
Ronojoy Dutta, CEO of IndiGo – India’s largest airline, announced on March 19, that the airline was instituting pay cuts for their senior employees and he would himself take the highest cut of 25 % amid the novel coronavirus pandemic that has hit the aviation industry hard. Also the Apollo Tyres chairperson, Onkar Kanwar announced a 25 per cent cut in their remuneration. GoAir, Indian low-cost airline has already sent 80 of its expat staff home. Vijay Shekhar Sharma, CEO of Paytm, told that he would not take his salary of this month and next. Not only Indian companies but many foreign national companies have also decided to cut off wages.
Many companies are laying off Employees due to coronvirus crisis
U.S. airlines, which directly employ close to 750,000 people, are on edge about how quickly lawmakers will provide aid to the industry, dealing with a collapse in demand. The executives have described this collapse even worse than 9/11. United and its competitors have decided to slash flights, freeze hiring and ask employees to take unpaid leaves. In tourism industry, job losses could reach 67,000 as coronavirus sees international tourism dry up and consumers pocket their wallets. Tourism, hospitality, retail, forestry and transport sectors are all expecting to shed thousands of workers with claims 5000 jobs are on the line unless there is immediate assistance for 65 large tourism businesses facing full or partial closure. Westpac NZ chief economist Dominick Stephens has quoted that the overall unemployment is likely to rise from 4 per cent to 5.5 per cent or 45,000 unemployed people. He further added that the drop in jobs could reach up to 67,000 when “shadow unemployment” is taken into account. Kenya Flower firms have sent home more than 1,000 employees after huge losses following a closed European market.
On the other hand, several companies also promised that they would not cut salaries of their staff and were not considering layoffs in the wake of the coronavirus pandemic. Rajiv Bajaj, managing director and chief executive officer of Bajaj Auto, has said, “I will cut my salary to zero before a single employee is laid off.” Similarly, other Indian business groups like The Aditya Birla group, the Vedanta group and the Essar group have also promised not to cut any jobs or salaries of their staff. U.S. airlines are asking for $58 billion in government aid, including direct grants.
This unemployment will have direct impact on country’s GDP and will result into much slower economic slowdown. As due to unemployment, majority of the laid off people will totally refrain from buying or using new products or services. This is directly going to affect the economic progress of many nations. According to some reports, new claims for unemployment benefits climbed to 281,000 last week as the coronavirus pandemic shuttered businesses and left people out of work. The Labor Department said that it was the highest level since Sept. 2, 2017, when they totalled 299,000.
Governments are helping companies Cope with Crisis
At the same time, many governments are trying to help the affected businesses & people cope with the coronavirus crisis. For instance, the UK government said that it will subsidize the wages of any worker facing unemployment because of the coronavirus pandemic as it ordered the closure of pubs and restaurants to try to contain the outbreak. Their finance minister Rishi Sunak told reporters that the government will cover 80% of worker salaries for at least the next three months up to a maximum of £2,500 ($2,900) a month. The Danish government announced that it will cover 75% of the salaries of employees paid on a monthly basis who would otherwise have been fired, with companies paying the remaining amount. But as of now, many governments have not taken any action to deal with the issue of lay-offs. It will be interesting to see how Indian government will react to the this phase of lay-off and unemployment.
Nitin Konde
