India, home to world’s second leading workforce with 469 million workers, is facing challenges like never before. The current economic scenario coupled with the associated anguish of mounting interest rates and inflation, held up investments and an overvalued rupee is having a strong impact on the domestic job market.
The current economic downfall, and the severity of its impact on the job market, is different for three reasons. Firstly, this is the only time when none of the sectors got a reprieve, which indicates every sector has been hurt unlike in previous occasions wherein there were sunrise sectors which to an extent compensated the recession in traditional sectors.
Secondly, for numerous challenges relating to weak consumer attitude, policy blockage, and political hindrances, the manufacturing sector is going through its worst period. Even sectors like real estate and gems & jewellery which once created huge jobs too are going through difficult times.
Thirdly, compared to 2006-07 there has been a three-fold increase in the number of graduates passing out, whereas job creation has not been able to keep pace and thus this is aggravating matters further.
According to an ET online poll conducted with over 2000 respondents, over half the participants polled agreed this being the worst job market scenario. Majority of them fear losing their existing jobs. The worst expression of the poll was three-fifth of the participants responded negatively when asked about revival of job market in next one year.
The job market, which has gone down by 20 to 25% over past year with entry and mid-level being badly hit, is experiencing hiring freeze across sectors, and seems it’s headed for even challenging times with replacement job and need-based hiring drying up. Manufacturing, IT, BFSI and Telecom are the hardest hit sectors.
As per statistics on permanent hiring, the situation is quite similar to 2008 with companies instead of increasing their permanent headcount is depending more on the contractual staff and in some cases even outsourcing the work to freelancers. This gives them double benefit, at one end save high costs of hiring a full-time staff and on the other hand being able to outsource at lesser charge and also scale-up or downsize temporary staff as necessary.
Recently, FICCI had alerted government about the bleak job market in the event of mass retrenchment and fresh hiring taking a hit to sustain operations. They had advised government to take necessary action to reverse the growth trajectory and restore public confidence. Estimates indicate 1 crore people join the workforce each year; however, there remains a wide gap in terms of existing skill set of fresh graduates and the skills as expected by the employer.
Placement firms confirm there are seeing lots of resume pouring from BFSI sector looking for opportunities in other sectors. Companies on the other hand are not looking at mass hiring but instead focusing on specialized, niche hiring. This might pose big challenge for fresh graduates in times ahead and might eventually lead to high youth unemployment.