Growth in job creation slowed in FY19 from a year ago with farming, crude oil, telecom, iron and steel, mining and hospitality being the worst performing sectors, an analysis of the annual reports of more than 960 large companies showed. This is the latest indicator of the job crisis gripping the country.
Among the 969 companies from 33 diverse sectors, including manufacturing, services, minerals, metals and mining and financial services, total employment went up from 5.78 million in 2018 to 6.03 million in 2019, a jump of 4.3%. This is slower than the 6.2% growth seen between 2017 and 2018, said rating agency CARE Ratings Ltd in an analysis shared on Friday. In 2017, these companies had reported a total job count of 5.44 million.
While the worst performing sectors listed above saw a contraction in the number of jobs, 11 sectors, including fast moving consumer goods, power, trading, infrastructure, healthcare, banks and construction materials, showed an increase in the job count, but at a rate below the average. Finance, electricals, retailing, realty, IT and insurance sectors reported job growth above the average in the sample studied.
“Growth in employment for the sample companies has not been commensurate with gross domestic product (GDP) growth," said CARE Ratings, adding that the trend across sectors varied, with services tending to be relatively better than the others. It also said growth in industry may be considered a prerequisite for employment.
CARE Ratings said that companies studied were relatively larger ones and excluded small and medium enterprises, which tend to be more vulnerable to the external environment.
“In a way these companies would be part of the medium- to large-sized companies, which are dominant in their respective sectors. Notwithstanding these limitations such data is still indicative of patterns of job creation across sectors," said the report.
The muted job growth points to stress in the economy, which expanded at 5.8% in the March quarter, the slowest in five years. The economic downturn prompted the central government to consult the captains of the industry last week to discuss ways to arrest the slowdown.
Industry leaders are expecting a stimulus package from the government although it has limited fiscal space for announcing large tax cuts.
However, Prime Minister Narendra Modi in his Independence Day speech on Thursday reiterated his commitment to facilitate a ₹100 trillion investment in the infrastructure sector, which could boost growth.
“The government is cognizant of the economic situation. The finance minister has met representatives from all segments of the industry and has received their feedback. Now this feedback will be used for policy making," said Rajiv Kumar, vice chairman of federal policy think tank NITI Aayog in an interview with Mint on Friday. He was answering questions on the government’s response to the growth slowdown. The Centre for Monitoring Indian Economy, a private data research organization, has estimated that during calendar year 2018, nearly 11 million people lost their jobs—9.1 million in rural India and 1.8 million in urban areas.
The companies analysed by CARE Ratings are a subset of firms tracked by the Employees’ Provident Fund Organisation (EPFO), which covers every employer that has 20 or more workers. According to EPFO data, in 2018-19, the retirement fund body saw a net enrolment of 6.11 million subscribers. The net subscribers are believed to be the net hiring that happened in the year ended 31 March 2019. Though there was no EPFO data available for the 2017-18 financial year, from 1 September 2017 to 31 March 2018, the retirement fund data showed a net addition of 1.55 million subscribers. To be sure, these new additions take into account employees of all age groups.