Recession and Our Role

Recession
and our
Role
Simple tips for employees during recession times

Introduction_Market Economy
Before understanding the “Recession”,we need to understand
the market economy.There are two stages of market
economy,
1. Growing market economy

2. Declining market economy
And two factors of market,
1. Demand
2. Supply

Growing market economy

Declining market economy

Two factors of market_Demand and Supply
PRODUCER always wants his demand of his product to be HIGH cost
CONSUMER always wants his buying cost to be LOW
Demand :Actual demand is the price at which consumer is ready to

buy,and Producer is ready to sell.Here it is not as the quantity.
Because,
Price decides the Quantity of Sales;
Competitive Price = More Demand;
In-competitive Price = Less Demand
• Producer's Demand
• Consumer Price
Recession
 What is Recession?
In economics, the term recession generally describes the reduction
of a country's Gross Domestic Product (GDP) for at least two
quarters.

What is GDP?  Gross Domestic Product
Definition : The monetary value of all the finished goods and

services produced within a country's borders in a specific time
period, GDP is usually calculated on an annual basis. It
includes all of private and public consumption, government
outlays, investments and exports less imports that occur
within a defined territory.
GDP = C + G + I + NX
1. "C" is equal to all private consumption, or consumer spending, in
a nation's economy.
2. "G" is the sum of government spending.
3. "I" is the sum of all the country's businesses spending on capital.
4. "NX" is the nation's total net exports, calculated as total exports
minus total imports. (NX = Exports - Imports)
India’s GDP
In 2008-Q3 India’s GDP slump down to 5.3%

Recession and Depression
There is a joke that economists quote to explain the

Difference between “Recession & Depression”
RECESSION
= WHEN YOUR NEIGHBOR LOSES HIS JOB
DEPRESSION
= WHEN YOU LOSE YOUR JOB

Causes of Recessions
1. Currency crises  Frequent change in international currency rate.
2. Energy crisis  Usually refers to the shortage of oil and additionally to

electricity or other natural resources of energy.
3. War  Ruins the country property.Refers and relate to economy.
4. Under consumption  Insufficient consumer demand relative to the

amount produced
5. Overproduction  Excess of production over consumption.
6. Financial crisis  Some financial institutions or assets suddenly lose a

large part of their value.
Bad Incidences Happening;
Example: September 11 Terrorist Attack in US ;

Mumbai Attacked in India ;
Taliban occupy Swat ;
etc…
Series of such incidences

leading into a kind of War
Terrorists’ Attack on 11th September in US
Created fear in people
People cancelled their travel plans
Resulted in low occupancy rates
Airlines & Hotel Industries badly hit
Airline & Hotel Industries offered discounts,

gift coupons, to attract people
But, still, no improvement in occupancy
rate
Airline & Hotel Industries started
CONTINUED
“Cost Reduction” activities IN NEXT SLIDE
Terrorists’ Attack on 11th September in US
Airline & Hotel Industries started

“Cost Reduction” activities
iii] Salary reduction to

i] Reduce No. of flights ii] Lay off people
“Not laid off people”
Low or No income to They became careful due

In flight meals reduced
spend and buy goods to the fear of loss of job
Meals supplying company Demand for other goods Started saving money
got the hit come down instead of spending
Catering company now, Demand for other goods

lays off people come down
So, you can see how the hit on Airline and Hotel
industries can affect “Un-related” industries
in the end;
One industry can hit many other industries when the

confidence level of millions of consumers &
producers
drastically comes down;
Effects of Recessions
1. Credit crunches Banks may suddenly stop or slow lending activity.
2. Bankruptcies Bankruptcy typically involve concealment of assets,

concealment or destruction of documents, conflicts of interest, fraud
claims and false statements or declarations.
3. Deflation Persistent decrease in the general price level of goods and

services.
4. Foreclosures Legal and professional proceeding in which a lien holder,

usually a lender, obtains a court order of redemption.
5. Unemployment when a person is available to work and currently seeking

work, but the person is without work.
Current Markets condition
o We all know that markets have slumped.
o We read about job-loses in news papers.
o People talk about atleast 24 months of recession.
o Early entrants are not getting jobs.
o Companies are closing.
o Sales are not picking up.
o Suddenly cash has evaporated from the market.

o Profitability is seriously hit.
How to come out of Recession?
It is unhealthy for any nation to be in Recession;

So, Government will take certain countermeasures to
eliminate or reduce the effect of recession for
turnaround;
Important Point : Today, it is a market Economy,

*Producers can produce and can sell at their prices and
Consumers;can decide to buy or not…
Here both Producers and consumers are free to

act without forced action.

Government Plans against the Recession?
Hence, Government does not have direct control on
Producers’ & the Consumers’ behavior; But, they can
influence millions of Producers &Consumers with
Government’s policies;
Government has 2 plans
Fiscal Policies Monetary Policies

(By Govt.) (By RBI)
Government influences the RBI manipulates

economy by changing how the available supply of
it (Government) spends money in the country
and collects money
Govt control through RBI
Repo Rate: Repo rate is the rate at which the banks can borrow
money from a central bank of the country in order to avoid
shortage of funds. It is also a financial & economic tool in the
hands of government to control the availability of money
supply in the market by altering the repo rate from time to
time.Current repo rate is 5.0 %.
Reverse Repo Rate :Reverse Repo rate is the rate at which

Reserve Bank of India (RBI) borrows money from banks. Banks
are always happy to lend money to RBI since their money are
in safe hands with a good interest. Current rate is 3.0 %.
CRR :Cash Reserve Ratio is the amount of money that the banks
have to necessarily keep with the RBI.The RBI pays the interest
on the amount kept with it. Current CRR rate is 5.0 %.
Govt_Fiscal Policies
See the flow :
Fiscal Government influences the economy by changing

Policies how Government spends and collects money
1] Tax cuts for More money

businesses or available for
for individuals spending
2] More spending Individuals get Demand picks

by Govt. to salary and spend up; Market
create jobs money can recover;
3] Automatic
Some income to
fiscal policy;
unemployed
Unemployment
people to spend
Insurance
Govt_Monetary Policies
See the flow :
Monetary Government manipulates the available supply

Policies of money in the country
More money
1] Reduce CRR
available for bank
for banks
to give loans
Demand picks
up; Market
2] Lower the
Individuals take
can recover;
Repo & Reserve
more loan
repo rates`
What about India in global market crises
Most of the developing Currently, GDP Growth

economies like China, Slow Down Rate Down; But,
India; Stage; Not yet Still expected to be
in Recession Around 6% in India
Most of the developed

economies like US, Currently, GDP Growth
Japan, Germany, etc in Recession Rate Negative;

Employee - What do I do during recession?
TGC Prasad, Bangalore

For Employer-Recession as Stick
o Employers are taking every opportunity to slash employment.
o Some employer’s are hammering employees for pay cuts, even when
there is no justification for these actions and though project is
running well and client has not reduced billing.
o Declaring lay off for some employees and making remaining
employees work harder.
o Some managements are making organizational cost cutting simply
because they can get away with these overheads with the reason of
recession.
o It’s very good reason of recession not to make increments even
though company had good business through out the year.Instead
they are thinking of reduction in salary and decreasing man-power.
o Curtailing snacks and coffee in office.
o Harassing employees in name of performance.

Wise Employer-Recession as Challenge
o Rather than earning the profit some wise employer treat this recession
as a challenge and to keep employees moral up and maintain the
relation with industrial harmony.
o Took this time to set the good belief and confidence among the all
employees within the recession.
o Encourage their employees for enhanced training programs,to increase
their domain knowledge as per the company’s future work policies,and
prepare the skill sets required after the recession time.
o Offers professional and personnel development programs which will
helps an every individual throughout their lifetime.
o Reviews their company policies and re-structure and makes the positive
changes with the help of expert’s opinion.
o Instead of deployment,thinking to retain the talent and experience
with the committed options.
o Implement the energy cost saving policies.
o Hunting for new customers by offering low cost and better quality
service.
o Take the advantages of Govt. policies during the recession time.
I am employee
o I need to keep my job.
o I need to pay EMIs.
o I have a family to run.
o I need to keep working to sustain myself.
o I need to feel secure.
o I need to save a little money for a rainy day.

Basic Don’ts
o Do not take too much vacation.

o Do not ask for promotion. Don’t emphasize(ask) for huge salary
increase. If you ask, you may soon not have a job. Remember, there
are people available with better skills at lower salary levels.
o Do not complain.
o Do not waste time gossiping.
o Don’t resist a transfer.
o Don’t resist travel.
o Don’t resist a salary cut if done with valid reasons.
o Don’t resist extra-work load.
o Don’t resist extra time at office if needed.
o Don’t change jobs in this market. It is too risky.
Basic Do’s
o Be punctual to office.
o Ensure you pick up new skills.
o Do something innovative.
o Take training programs.
o Always be engaged & productive.
o Ensure you deliver as per deadlines.
o Organize team meeting to improve productivity.
o Ensure that you contribute to knowledge forums etc..
o Work doubly hard and save money for your company.
o Remember, your boss is always right and is the best (During

recession or no recession).
Daily Expenses
o Take a list of your expenses.
o Tick “Need to have” vs. “Nice to have”
o Knock off all “Nice to have expenses” – Right Now !
o Assuming you didn’t have a job – Plan for cash to survive for 24 months.
considering, this recession will take at least 24 months to come out !
o Other tips to cut expenses –
o Going to malls is expensive.

o Good restaurants are expensive.
o Impulsive shopping is expensive.
o Taking flights is expensive.
o Eating out daily is expensive.
o Check services which you are not using but have subscribed to.
o Going on vacations is expensive.
The big loans
o Home Loan & EMI
o If you own one home and you are living in it and paying EMI, then see if
you can partially fore-close it.
o If you have two homes and paying EMI on both –
o If you think the property will bring a decent value, then sell it.
(though it is a buyer’s market)
o If you have enough money, then fore-close a significant part of it. If
your interest rate is less than bank FD
then you don’t have to fore-close.
o If you can rent the second home –
don’t bother about amount of rent.
Rent to get cash flows going.
Don’t feel bad that rental is
not good enough.

Do I buy anything now? Do I invest?
o Investing in stock and mutual funds ?
o Generate spare money every month – take a Systematic Investment plan (about
15% of your salary) – keep buying at low values for the next 24 months.
o Buy an asset – buy a house/apartment/land?
o If you have cash and feel secure, this is a great time to buy. You can negotiate
hard with builders/developers. Actually, you can write your own terms on the
agreement.
o First preference – Buy Land (always buy small sites, it is easier to dispose.
Else farm land is a great option – big land, low cost)
o Second preference – Buy House + Land (again buy from known developers)
o Third preference – Buy apartment (you always wanted to buy that 3-bed/4-
bed apartment from a reputed builder, but could never afford) – now is the
time to ask for. Some are being sold at ridiculous prices.
I am looking for a job – what do I do?
o Enroll in a course / training / education as you are searching for a job. It enhances
your skills.
o Enroll as a trainee anywhere you get an opportunity. Most trainees end-up getting
confirmed employment as a build relationships in the company.
o Do not have any preferences regarding – City, Salary, Designation, Location, Shift
etc. Just take it and gain experience. It is the first step to a long career.
o Go through references of people who are already working.
o During job-interviews – the keyword which employers are looking for is “flexibility”
o Agree for “any place/date/time” to take job interviews. If you don’t, somebody
else will take that interview slot and will get selected.
o Please improve your communication skills – this one skill fetches jobs!
These suggestions are tough – Do I live life or not?
o The new principle – “Happiness is inversely proportional to
expectations/desires”. More the expectations / desires – lesser the
happiness and vice versa.
o Some other ways to live great life –
o Spend time with family – go for a picnic in a nearby garden.

o Exercise and walk a lot, drink lots of water.
o Listen to Radio, watch some TV.
o Visit Libraries, read books which you purchased, but never had a
chance to open them.
o Go to friends place a for a dinner.
o Enroll into a hobby – music, painting etc
o Do social service – start teaching, mentoring etc.
o Spend more time with your children.
o Join laughter forum, attend conferences and meet interesting people.
o Go for concerts.
Don’t worry
What goes down will always go up, Markets will
rebound – these tips will prepare you to be a
winner !!
HOPING THIS TIME RECESSION VANISHES SOON SO THAT

INDIA GETS BACK TO ITS STRONGER
GDP GROWTH RATE OF 8% TO 10% .
(AS PER THE EXPERSTS OPINIONS
IT WILL LAST TILL Q3 of 2009)..
You can be updated yourself with the current economic condition through
‘Business TV-channels,News,News papers’.


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Recession

Simple tips for employees during recession times

1. Growing market economy

And two factors of market,

Simple tips for employees during recession times

Simple tips for employees during recession times

Simple tips for employees during recession times

Demand :Actual demand is the price at which consumer is ready to

Simple tips for employees during recession times

Definition : The monetary value of all the finished goods and

Simple tips for employees during recession times

There is a joke that economists quote to explain the

Simple tips for employees during recession times

1. Currency crises  Frequent change in international currency rate.

2. Energy crisis  Usually refers to the shortage of oil and additionally to

3. War  Ruins the country property.Refers and relate to economy.

4. Under consumption  Insufficient consumer demand relative to the

5. Overproduction  Excess of production over consumption.

6. Financial crisis  Some financial institutions or assets suddenly lose a

Example: September 11 Terrorist Attack in US ;

Series of such incidences

Created fear in people

People cancelled their travel plans

Resulted in low occupancy rates

Airlines & Hotel Industries badly hit

Airline & Hotel Industries offered discounts,

Airline & Hotel Industries started

iii] Salary reduction to

Low or No income to They became careful due

Catering company now, Demand for other goods

One industry can hit many other industries when the

1. Credit crunches Banks may suddenly stop or slow lending activity.

2. Bankruptcies Bankruptcy typically involve concealment of assets,

3. Deflation Persistent decrease in the general price level of goods and

4. Foreclosures Legal and professional proceeding in which a lien holder,

5. Unemployment when a person is available to work and currently seeking

o We read about job-loses in news papers.

o People talk about atleast 24 months of recession.

o Early entrants are not getting jobs.

o Companies are closing.

o Sales are not picking up.

o Suddenly cash has evaporated from the market.

Simple tips for employees during recession times

It is unhealthy for any nation to be in Recession;

Important Point : Today, it is a market Economy,

Here both Producers and consumers are free to

Simple tips for employees during recession times

Fiscal Policies Monetary Policies

Government influences the RBI manipulates

Reverse Repo Rate :Reverse Repo rate is the rate at which

Fiscal Government influences the economy by changing

1] Tax cuts for More money

2] More spending Individuals get Demand picks

Monetary Government manipulates the available supply

Most of the developing Currently, GDP Growth

Most of the developed

Simple tips for employees during recession times

TGC Prasad, Bangalore

o Harassing employees in name of performance.

o I need to pay EMIs.

o I have a family to run.

o I need to keep working to sustain myself.