“Nobody will like to touch the permanent workforce,” explains Rajesh A.R., a vice-president at TeamLease. “They would rather get rid of contract workers.” About 180,000 unskilled and semi-skilled workers in the housing sector have lost their jobs as realty projects across the country have been stalled for want of funds and customers, said Priya Ranjan Swarup, director general of New Delhi-based Construction Industry Development Council, a body set up by the Planning Commission and the construction industry.
Most of these labourers have moved on to the infrastructure sector (where projects are still progressing), Swarup said, adding that infrastructure projects will not hit a roadblock as the government is expected to announce an economic relief package shortly. The Indian construction industry employs 31 million people, with about 27 million being unorganized, contract labourers.
To be sure, most individual companies, when asked if they had cut temporary positions, said they had not. Some said they plan to do so while others refused to comment.
Jayant Dawar, vice-chairman and managing director of Sandhar Group, a provider of mirrors and locking devices to car and two-wheeler makers, based in Gurgaon, near New Delhi, denied any layoff of contract workers. He, however, said, “We are not replacing employees when they leave after their contract gets over.” The company thus aims to reduce its workforce from the current 3,600 to 3,300 in three-four months. Some 60% of his workers are on contract.
New Delhi-based auto parts company Amtek Auto Ltd plans to cut contract workers. Santosh Singhi, chief financial officer of Amtek, said, “We plan to reduce the contractual work force by at least 15-30% in the next three months.” The company supplies components to vehicle manufacturers including Aston Martin and BMW, and has subsidiaries in the US and Europe.
There are similar indications from the textile industry. Said Vijay Jindal, managing director of Faridabad-based textile exporter STL Global Ltd: “Everybody is reducing workforce by 10-20%, but we have not done it. We have (instead) cut our extra expenses by 2-3%.” The company, with sales and other income of Rs342 crore, employs 6,000 workers.
Raja M. Shanmugham, managing partner at Warsaw International, a garment exporter based in garment exporting hub Tirupur, Tamil Nadu, said: “Job retrenchment has started and will gain momentum in coming days (in Tirupur).” Shanmugham is also an executive member of the Tirupur Exporters’ Association, which has 650 members. He is quick to add that his company has not cut any jobs but only reduced working hours, from a one-and-a-half-day shift to a one-day shift, as orders have slid 30%. Warsaw has a turnover of Rs60 crore and employs 1,000 workers, a mix of daily-wage and contract workers, and exports to European markets.
Private sector lender ICICI Bank Ltd, which used to employ close to 10,000 temporary workers as so-called feet-on-street to peddle car and personal loans, has axed the number by 30% in order to clamp down on lending, according to a person familiar with the situation, who did not want to be named. Email queries sent to India’s second largest bank did not fetch any response.
Citifinancial Consumer Finance India Ltd, India’s largest non-banking financial company, also shed several temporary staff. But the company spokesperson declined comment on the matter.