The prospect of slower economic growth this year seems to have had its inevitable effect on hiring decisions. A latest quarterly survey of employment outlook released by hiring firm Teamlease suggests that Indian companies will hire less this year than they did in previous years.
India had a tryst with jobless growth in the 1990s, which led to worries that economic reforms have not helped enough people. But that changed after 2002, as companies large and small went on a hiring spree. Rising wages were one clear indication that jobless growth was history.
It is clearly too early to say whether the economy will stop creating enough jobs to absorb both young workers as well as older ones trying to flee their farms. We hope India does not slip back into the 1990s groove of fast growth and lacklustre job creation. Jobs in the modern sectors will make growth more inclusive than many of the expensive schemes dreamed up by this government ever will. Economic growth in the vicinity of 8% a year should help generate enough new jobs.
But, there are problems at the edges, especially in some sectors that have seen explosive rates of business and employment growth. Take software. There are indications that software companies will pick up fewer engineers from colleges this year. The same seems to be the case in the booming banking sector.
The immediate effect of this is that employers have been emboldened to take tough HR decisions. Consider a few recent examples. Tata Consultancy Services Ltd decided to cut variable pay for its employees earlier this year because they did not meet internal financial targets. ICICI Bank Ltd says it will freeze bonus payments and skip promotions in the new financial year. Yes Bank Ltd has sacked 392 employees for non-performance.
None of this is a cause for major worry. There will be a sharp drop in new jobs at worst; mass retrenchment and other horrors are almost out of the question.
But, employment trends will be worth watching closely over the next few quarters as the economy slows a bit and corporate profits are squeezed.
Will the job market slow down in tandem with the rest of the economy? Write to us at email@example.com