Most distressing are the continuing reports of job losses and not additions in several sectors spread over last three years. If these accounts are to be believed, from textiles, banking, infrastructure, information technology to capital goods, job losses have apparently become rampant.
There’s no official compilation of the job losses that may have happened since the BJP-led National Democratic Alliance (NDA) assumed power in May 2014 after the tumultuous Lok Sabha elections. But data points emerging from economic tracking agencies and several high profile companies and sectors suggest that pink slips are a strong leading indicator on where the economy is headed. Hitherto impression that job losses were only limited to informal and rural sectors may not be the entire truth and lay offs may have extended to organised industry as well.
While the BJP romped home with the battle cry of providing 10 million job opportunities, what’s happening in the real economy may be just the opposite. For instance, closure of 67 textile units in cotton and man-made fibre segment has reportedly led to laying-off over 17,500 workers. Most closures happened in the organised power-looms and textile mills that hitherto never reported lay offs in such A large scale. What’s important to capture through scientific study and data-backed industry analysis is if these closures set a trend? Does it also mean that job losses in handlooms prevalent till date has spread up the value chain?
Well, there’s no substantive counter narrative at least till date to disprove that the closures never happened. And, the textiles ministry’s official website does confirm these layoffs.
Capital goods sector has not reported significant job losses in several years. Even behemoths like Larsen & Turbo with strong balance sheets and handsome net profits laying-off over 14,500 people was a seismic shock for any government to sit up and ponder on a counter offensive. Whether L&T call was more strategic or has it begun to feel the heat of the slow down is the moot question? CMIE created a flutter in July when it said that About 1.5 million jobs were lost during January-April 2017. The estimated total employment during the period was 405 million compared to 406.5 million during the preceding four months, September-December 2017.
Infrastructure companies that continue to face a liquidity crunch and debt overhang have either curtailed their operations or are sitting on a string of stalled projects. Unless these ventures especially in the power sector take off like the ones in roads, rapid spread of joblessness in infrastructure sector may act as a negative overhang on the economy. Already, there have been several reports of non-conventional energy resources companies cutting their employee strength at a time when the government continues to lay huge emphasis on new energy resources development especially solar and wind power
If three of the largest information technology companies like Infosys, TCS and Tech Mahindra reported a 5,000 lower head count in just three months, then what does one make of such reports? HCL Technologies and Wipro may have made up partially for the shrinking numbers during April-June 2017 quarter. Most intriguing is that even industry lobbies like Nasscom have been silent on the rampant layoffs while it claims IT and ITES sector is providing 39 lakh jobs with net addition of 175,000 new hands in last fiscal.
From media reports, its clear that HDFC Bank that has been a big recruiter in the past cut its staff strength by a whopping 10,677 in the just last few months. Are these examples not powerful signals for powers that be to sit up and work to reverse the slide?
One big explanation could be that hiring new hands has been few and far between and job losses simply outnumbers the hirings. Secondly, economic policy managers’ argument that the emphasis was on creating conditions for job providers and not job seekers also may not work given that over 300 startups folded up in just one year?
A comprehensive scientific study across sectors and segments may have to be initiated by Niti Aayog if the government were to claim that the media reports were incorrect or were half-truths. While panic reaction may not put the economy and jobs on track, deceiving one’s self that everything was hunky dory may not help either.