Study of job losses as important as job growth in economy

The organised sector of industry is witnessing massive job losses involving educated and technically qualified persons. But there is no published study or data record of such job losses

Among other key sectors, the Indian automobile industry is going through its worst slump in last two decades and has shed over 2.30 lakh jobs. (Representational image) 
Among other key sectors, the Indian automobile industry is going through its worst slump in last two decades and has shed over 2.30 lakh jobs. (Representational image)

Nantoo Banerjee/ IPA

It may be time to track job losses in the country alongside the routine study of job growth. The government may disagree but the country’s job scene looks truly dismal, if not alarming. This is partly because of the dwindling economic growth and recessionary pressure on a number of industries.

Industrial shake up, corporate mismanagement by greedy short-sighted entrepreneurs and the urgent need for implementing new technologies such as artificial intelligence, machine learning etc are also contributing significantly to job losses.

The global economic slowdown too is badly impacting the import-dependant Indian market with more foreign countries trying to push their India sales while Indian exports are shrinking. Imports adversely affect the local labour market. Falling exports contract it further.

Companies in the sectors such as telecom, steel and non-ferrous metals, mining and quarrying, cement, engineering and transport, electronics and software, automobile, brown and white goods and banking among others, are chucking jobs. The so-called ‘voluntarily retirement’ in industry and banking is practically involuntary as surplus employees have little option.

Alongside the jobless economic growth, India’s labour force is faced with the phenomenon of growing job losses. In a depressionary situation, job losses follow a vicious pattern combining both the manufacturing and services sectors as demand slows down.

Growing job losses are crippling employees’ confidence, shrinking purchasing power, causing frustration and, often, resulting in a hidden social unrest. The government or the state-run management of BSNL and MTNL may be happy about the ‘good response’ to the ongoing ‘voluntary retirement’ scheme as ‘good riddance’, but it is frightening to note that over 92,000 employees of the two organisations have opted for VRS in just last two months.

The VRS target is 1,00,000. The question is: what will those educated post mid-career telecom employees do in the rest of their life? The public sector bank reorganisation will throw at least 50,000 bank employees out of job by next year end, ostensibly under VRS package. Where will they go? How will their families survive after VRS booty dries up?

The ‘strategic sale’ of select public sector units will send thousands out of job. The possible closure of Air India in the absence of a buyer, as union civil aviation minister Hardeep Singh Puri stated in Parliament, will send thousands jobless. Even if a buyer is found, the government proposes to give the new owners permission to retrench employees within a span of one to three years.

The government is said to be already considering a plan to make Air India more attractive for potential buyers by allowing employees to be retrenched a year after divestment. There are the two proposals being discussed — one is to allow them to retrench after one year and the other is to give three years.

Thousands have already lost job following the recent upheaval in India’s civil aviation industry that had earlier seen the closure of two giant private airlines — Jet and Kingfisher.

The Indian auto sector is in dire straits and is facing a crisis not seen in the past two decades. Going by the Society of Indian Automobile Manufacturers’ (SIAM) officially released data, around 2.30 lakh auto sector jobs have been lost as the sale of passenger cars showed a big mid-year drop.

SIAM director general Vishnu Mathur said that it was the worst slump witnessed by the auto sector in the past 19 years. SIAM data also showed that 300 dealerships have been shut down in recent times and that 10 lakh jobs have been hit in the auto component manufacturing industry. The worst hit was the passenger vehicle category, which saw a 35 percent decline in sales in July.

Sales of commercial vehicles declined 25 percent while the sale of two wheelers was 16 percent lower. SIAM data underscore the severe crisis the Indian auto sector finds itself in. Industry leaders have warned of massive job cuts as manufacturers look to halt production. This is frightening.

While the payroll data of Employees' State Insurance Corporation (ESIC), covering mostly small and medium scale industries, showed that around 12.23 lakh jobs were created in September as compared to 13.38 lakh in August 2019, it did not say how many might have gone out of the payroll.

The Centre for Monitoring Indian Economy (CMIE) said the country’s unemployment rate rose to a three-year high of 8.48 percent in October, up from 7.2 percent in September. The unemployment rate for the month was the highest since August 2016. Gross enrolments of new subscribers with the ESIC were 1.49 crore during the entire 2018-19 fiscal, the National Statistical Office (NSO) said.

The NSO report is based on the payroll data of new subscribers of various social security schemes run by the ESIC, retirement fund body EPFO and the Pension Fund Regulatory and Development Authority (PFRDA). It has been releasing the payroll data or new subscribers data of these three bodies since April 2018.

However, ESIC covers only member-firm employees earning ₹21,000 (US$300) or less each per month as wages. Details of disappearing or defaulting members are rarely disclosed by ESIC.

Unfortunately, the organised sector of industry is witnessing massive job losses involving educated and technically qualified persons. This is a matter of big concern as new opportunities for such job losers are few and far between. There is no published study or data record of such job losses.

India’s GDP has been on a declining mode for the last six consecutive quarters. India is the world's sixth-largest manufacturer, representing three percent of global manufacturing output and employing over 57 million people.

The break-up of the July-September GDP growth, this year, by NSO shows a negative growth of one percent in the manufacturing sector. This provides a vague idea of massive job losses in this sector during this period alone. It makes an official study of job losses is as important as job growth in the economy.

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