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Firms retrench about 700,000 temporary workers: industry body

Firms retrench about 700,000 temporary workers: industry body
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First Published: Thu, Dec 04 2008. 11 48 PM IST

Job crunch: A file photo of a construction site in Noida, near New Delhi. The Indian construction industry employs 31 million people, with about 27 million being unorganized, contract labourers. Harik
Job crunch: A file photo of a construction site in Noida, near New Delhi. The Indian construction industry employs 31 million people, with about 27 million being unorganized, contract labourers. Harik
Updated: Thu, Dec 04 2008. 11 48 PM IST
Bangalore: In a slowdown, the axe typically falls first on temporary workers.
Some 700,000 casual and contract labourers have been estimated to have lost jobs in India, mainly in sectors that include export-oriented garment and auto parts manufacturing, banking, and realty, according to an industry association.
Anil Bharadwaj, secretary general of New Delhi-based Federation of Indian Micro and Small and Medium Enterprises, an association of small and medium enterprises (SMEs), said these jobs have been lost “from September to November across sectors such as garments, textile, jewellery, auto components, handicrafts, realty and leather across SMEs all over India”. The federation has links to 100,000 SMEs across the country. An SME is classified as a firm with less than Rs10 crore invested in plant and machinery.
Job crunch: A file photo of a construction site in Noida, near New Delhi. The Indian construction industry employs 31 million people, with about 27 million being unorganized, contract labourers. Harikrishna Katragadda / Mint
Even though few companies admit to these job cuts, there is substantial evidence from industrial clusters such as Faridabad near New Delhi and Peenya, among the largest such clusters in the country, located near Bangalore.
While there is no organization in the country that tracks casual and contract workers, Bhardwaj claimed to have extrapolated the job losses figure based on feedback from his members.
Manish Sabharwal, chairman and co-founder of TeamLease Services Pvt. Ltd, India’s largest firm in organized contract labour, also said the number of job losses could be around 700,000. But he was quick to add, “The data is hard to come by because 92% of India’s workforce is in the unorganized sector.”
While only a small fragment of job losses are in the organized contract labour market in which TeamLease operates, the majority are migrant labourers with no social security such as provident fund or gratuity. “These people are not highly skilled... They just pack their bags and go back home,” said Bhardwaj.
Sabharwal said his contract labour workforce of 85,000 has been cut by 1-5% every month for the last four months. Every time a worker’s contract is not renewed or is terminated, the person is taken off TeamLease’s rolls.
India’s 80-million-strong contract labour market is dominated by local contractors and middlemen who provide workers to factories and industrial units. Of the 80 million workforce, only 300,000 are in the organized space.
Blue-collar workers are being fired in garments and auto components with exports floundering; banking and realty are following suit with liquidity being tight.
“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.
Although individual companies are wary of admitting to cutting contract and casual labourers, examples abound. Rajive Chawla, president of Faridabad Small Industries Association, said: “Textile and auto components are badly down. Some 30,000 casual labourers are out of a job (in the Faridabad cluster).” His association has 18,000 industries under its fold in sectors as varied as auto parts, light engineering, dyeing, printing and textiles.
D. Muralidhar, president of the Federation of Karnataka Chambers of Commerce and Industry, an industry lobby group with 2,500 members, points to another example, that of Peenya industrial estate. “About 10-15% of 500,000 labourers employed in Peenya have lost their jobs,” he said. Peenya is one among the largest small-industry clusters in the country with over 5,000 units in auto parts, garments and light engineering.
National industry bodies such as the Federation of Indian Chambers of Commerce and Industry have no estimates for job losses. B.P. Pant, director, labour, at the federation, said: “It is very difficult to estimate how many contract labourers have lost jobs.”
Shally Seth contributed tothis story.
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First Published: Thu, Dec 04 2008. 11 48 PM IST