Bengaluru’s Peenya Industrial Area has seen 30% decline in business with job losses being reported across companies operating in the area even as the festive season sets in, employers and trade union leaders said.
“We keep our doors open for filing paperwork, but no production is really taking place," said Lata Girish, director, Fortifori Plastics Pvt. Ltd, a former president of the Peenya Industries Association.
Over a million people work at the small and medium establishments in Peenya, one of India’s largest industrial hubs. Describing the prevailing conditions as “pathetic", Girish said many people in the labour-intensive units have lost jobs since the beginning of the year. The industrial area in the northern part of Bengaluru houses manufacturing units of auto components, textiles, machine tools and engineering, and packaging solutions. It is spread over 40 square miles.
Kannada news daily Prajavani had first reported on the development.
Companies in Peenya have been trying to reduce overtime costs, besides shutting down the units during weekends.
The slowdown in automobile sales and plummeting investor confidence, among others, have forced the Prime Minister Narendra Modi-led National Democratic Alliance (NDA) to roll back several measures announced in the budget. Employers and unions said this was too little, too late, and would take long to show results.
“There are dark days ahead and no signs to suggest that things will get better," M.M. Giri, president, Peenya Industries Association, said. Giri added that there was also labour shortage in some industries that were doing well. Representatives of the textile sector said that the inability to innovate with the times has also resulted in losing out orders and business. This cannot be attributed to the overall economic slowdown, they added.
Several provisions in the budget had badly hit automobile sales and its supply chain, including component makers who operate out of industrial estates.
Members of the industries association had met finance minister Nirmala Sitharaman last week to voice their concerns. However, trade unions were not very hopeful. “Capital utilization is very low and industry houses want incentives that are unlikely to solve any problem for employees," Meenakshi Sundaram, state general secretary, Centre of Indian Trade Unions, said.
Desperate measures by factory workers to save their jobs would make them more vulnerable to exploitation by employers, which include low wages, unhealthy work environment, sexual harassment (more in textile sector) and further dilution of labour rights, she added.
Factory owners said that the businesses are yet to recover from the impact of demonetization and high tax slabs under the goods and services tax (GST), and the current economic slowdown is forcing industries to sack employees to limit losses.
Contract workers are the most vulnerable, and their loss adds to the unemployment numbers in a state where agricultural activity has been hit due to floods and droughts. The weak rural economy has forced many people to migrate to urban areas in search of livelihood. The Indian economy grew just 6.8% in 2018-19, a five-year low. Unemployment, meanwhile, is at a 45-year high as pointed out in a study by the National Sample Survey Office. Data from the Periodic Labour Force Survey shows that unemployment in Karnataka stands at 4.8% for people above 15 years of age, which is below the national average of 6%.