New Delhi: Indian companies added the highest number of jobs in at least 15 months during the quarter ended 30 June as employers who had deferred hiring because of uncertainty over the outcome of the national elections gained confidence to expand their workforce with Prime Minister Narendra Modi’s business friendly government taking charge in May.
Companies in India added 182,000 jobs in the three months ended 30 June to the number in the preceding three months, according to the quarterly jobs data compiled by the labour and employment ministry. Employers had added 36,000 fewer jobs in the March quarter from the preceding quarter. In comparison, they had hired 86,000 more in the quarter ended 30 June 2013.
The surge in hiring in the June quarter may have as much to do with the sweeping election victory of the Bharatiya Janata Party (BJP)-led coalition as with the sharp decline in job additions in the preceding three months. In fact, businesses, as the labour ministry data shows, had accelerated hiring even before the Modi government took charge on 26 May—perhaps in anticipation of a victory of BJP-led National Democratic Alliance (NDA).
The robust job additions in the June quarter were largely broad-based with at least five of the eight sectors—metals, leather, textiles, information technology and business process outsourcing and gems and jewellery—included in the survey reporting more jobs being created than in the preceding quarter, according to the labour bureau data.
The jobs data may cheer Prime Minister Narendra Modi, who came to power with a promise to boost employment generation and accelerate economic growth that has slowed to less than 5% in each of the previous two financial years.
Asia’s third-biggest economy has, however, expanded 5.7% from a year earlier in the June quarter, the fastest quarterly pace in about two years.
Hiring sentiment in India is positive and Naukri.com’s job index, a monthly report on hiring trends, is growing steadily suggesting a sustained momentum in hiring activity, according to Hitesh Oberoi, chief executive of Info edge (India), which owns the jobs website.
“We expect the upward growth trend to continue in the coming months," he said.
Interestingly, job growth has happened largely in the permanent category. Of the 182,000 job additions, 156,000 were added in the permanent category and the rest are contractual jobs. The number of direct or regular workers declined by 60,000 in the March quarter but employers had added 24,000 temporary jobs.
Among the eight industries, textiles was the best performer, adding 69,000 jobs during the June quarter, followed by 51,000 in information technology and business process outsourcing and 47,000 in metals. The labour bureau has been conducting the survey since the last quarter of 2008.
The results of last five surveys covering the period June 2013 to June 2014 show that employment at the overall level has increased by 372,000 and nearly half of this has come during the three months ended 30 June.
As part of a series of measures to generate more jobs, the new government has initiated labour reforms and unveiled the “Make in India" campaign to boost manufacturing in the country.
The real impact of the reforms can only be seen after 3-6 months, said a labour ministry official, requesting anonymity.
“It is perhaps the best scenario in the last one year and is a good sign that the economy is reviving," the official said.
On 16 October, Modi unveiled several labour reform measures including a single-window labour compliance process for industries and a new inspection scheme that is expected to end the so-called Inspector Raj, or the surfeit of permits, laws and licences that allow government officials to wield excessive power and hinder growth.
The single window compliance allows companies to file just one labour return online for 16 laws. The reworking of the labour laws is consistent with government’s approach, first spelt out in the July budget, to streamline rules and regulations to create a better business environment.
The government has also tabled in the Parliament amendments bills to three key labour laws—the Factories Act, 1948; Apprentices Act, 1961; and the Labour Laws (exemption from furnishing returns and maintaining registers by certain establishments) Act, 1988. Once approved, they are expected to make it easier for companies to do business in India, with provisions to allow flexibility in both hiring and working hours.
Better job prospects will also make it easier for the government to negotiate with trade unions, who are opposed to relaxing labour laws for industries, the labour ministry official said.