Lost Jobs and Unemployment Benefits...

The Bankruptcy-code passed few months back was among the most important legislations of the parliament, besides the GST and the price-control during high inflation, the government has proposed to set prices of some categories during high-prices due to demand and supply mismatch and lower interest rate and unemployment (more jobs). The uncertainty before the Bankruptcy-code on the hiring and firing of employees was a major road-block in the way of starting investment and employ people when the Indian-economy is growing at a high-speed even when the developed world is going through weak demand, which has undermined the Indian-exports and achieve us double-digit growth-rate. Once a company is declared bankrupt it becomes easy to lay-off labor and dilute the assets to pay bank-credit or credit… During slowdowns unemployment or lay-off increases which lowers demand and growth and investment and lowers the price-level whereas due to boom employment or hiring and demand, growth, investment and prices increase. The bankruptcy-code deters firms to fire labour because of loss or low demand. The market that has a weak labour bargaining-power, employ more people temporarily than a labour-market which gives importance to permanent-jobs. The temporary labour by contract could be fired when there is a downturn. The bankruptcy-code was positive for firms to decide for solvency; naturally a bankrupt firm could not support workers because of balance-sheet recession. Nonetheless, an economy with more permanent-jobs is likely to recover fast during a slowdown because demand would go down less while an economy with more temporary-jobs would take more time to recover. Lower nominal wages given to the labour could be substituted for lay-offs… lower nominal wages instead of complete lay-off could help the economy to recover fast, however during heavy headwinds it is not possible to continue employment… Lay-offs might be the last option used to tackle unemployment and demand and growth. Notwithstanding, the social-security-net by the government is also a land-mark labour-reform, but INDIA still face void in terms of a comprehensive unemployment-benefits plan because it is true that during recession firms employ temporarily and create low paying jobs or less jobs…  Unemployment-benefits during downturns could replace the demand lost because of joblessness…