Data reveals India's alarming job squeeze
The economic slowdown is no longer a mere conversational statistic. It is now hitting the middle class where it hurts most: In jobs. Two surveys, conducted by apex industry chambers FICCI and ASSOCHAM, released in the first week of September, confirm what head hunters and job portals have noticed for months: India Inc's pessimism about its business prospects, evident now for more than a year, has finally translated into a cut in hiring.
Between April and June 2012, the prospects of finding a job across a range of the most employment-intensive sectors-like information technology (IT), financial services, telecom and hospitality-in the economy fell dramatically compared with the first three months of 2012. With recession abroad, and policy paralysis at home, the nightmare for young job seekers looks unlikely to end. The assocham survey indicates where jobs will be lost, both in industry and geographical terms. Overall, in the 32 sectors surveyed, there is a 20 per cent drop in hiring between April and June when compared with January to March.The most startling finding of FICCI's business confidence survey for the three-month period between April and June 2012 is on employment. For the first time since the quarterly survey was initiated in July-September 2010, of the 150 companies that were studied, a massive 84 per cent expected hiring to fall or remain static. ficci's survey expects growth over the next six months to be "jobless".The fall in GDP growth to an average of just 5.4 per cent in the first six months of 2012 has cost jobs. There is a massive difference in the number of new jobs created at 5 per cent and 7 per cent, which was roughly the growth rate in 2011-12. That number is three million. Says economist Bibek Debroy, "At 7 per cent growth, the economy would create 10.5 million new jobs in a year. At 5 per cent growth, it will be just 7.5 million."
With industrial growth stagnant and agricultural growth suffering because of this year's erratic monsoon, the prospects for the remainder of 2012 look dismal. Even the services sector, the prime generator of jobs in India, is slowing down. It recorded just 6.9 per cent growth between April and June 2012, much lower than the 7.8 per cent that analysts had forecast.
The costs are human. Take Varun Sharma, a 46-year-old from Delhi, formerly general manager of a 4-star hotel in Jodhpur with an annual salary of Rs 14 lakh. He lost his job in January and spent the next eight months looking for a new one. In July, he ended up launching a food and beverage consultancy firm in Delhi but business is still slow.
Sharma is not the only one struggling. In September 2011, it took Delhi-based chartered accountant Dishant Gupta, 24, less than a week to get a job. He quit eight months later in April 2012. Since then, he has sent his resume to 20 companies to no avail. "Jobs seem to have dried up," he says.
For India, a decline in growth rate from over 8 per cent in 2010-11 to just over 5 per cent in 2012-13 is like a move from 3 per cent growth to a recession in the West. "The sharp economic slowdown and weak performance in manufacturing will take a toll on job creation," says D.K. Joshi, chief economist at analytics firm Crisil. The upa regime must take lion's share of the blame. Besieged by scams since late 2010, it has been in a state of frozen turbulence. Reformist legislation, in insurance, banking and retail, which could have lifted growth and employment, is stuck. The monsoon session of Parliament has been lost to the coal scam.
In the prevailing environment, the jobs scenario may unfold differently for different sectors. it is the one sector most dependent on how economic conditions overseas evolve. Others such as banking and finance, telecom and retail depend more on how domestic policy unfolds. With the Government living from scam to scam, things look bleak.