Job cuts and reduced recruitment result in growing unemployment

Submitted by cgpiadmin on Sun, 01/10/2017 - 11:52

Job sites have recently witnessed a 20-25% increase of applications from workers in IT and e-commerce companies. Business and trade papers further report that the Indian technology services sector is facing its worst growth period in close to a decade as the demand for their services has shifted from traditional outsourcing work to newer areas such as digital and cloud. In addition, automation through applications of robots are fast replacing human being in routine maintenance work of customer applications or IT infrastructure. This is in area where new recruits are usually employed.

According to one report, the failure of start-ups has added to the crisis of unemployment faced by young job seekers. Start-ups retrenched 9200 employees last year, in comparison to 5,500 in 2015.

For the first time in 25 years, Nasscom, the trade association of software and services sector, has postponed issuing a growth projection for 2017-18, in the wake of uncertainty due to regulatory changes in the US and the macroeconomic outlook. Automation in the IT and related services has meant that employees have to be trained in new skill sets. In this regard, Infosys and Wipro shifted more than 8000 employees from projects to other roles due to automation during the first half of this fiscal. Even sectors like consumer internet companies which had seen 15.5 per cent hike last year are predicted to see a much lower hike of 12.4 per cent in 2017.

The manufacturing sector is also seeing a similar decline in the availability of jobs. Major manufacturing firms cut around 30 per cent of their staff in 2016. This is expected to go up to 40 per cent in 2017, according to a large human resource (HR) services firm in India. Reporting on its over 2,500 corporate clients, the HR company has pointed out that entry-level jobs face the maximum risk as companies continue with their cost-cutting measures amid concerns over low growth. Until 2015, the manufacturing sector had the highest share of new hiring at 75-80 per cent, which declined to 50-60 per cent in 2016, and is expected to see a further decline in recruitment.

The recently presented mid-year Economic Survey for the year 2017 (see the report in MEL Sep 16-30, 2017) clearly points to a slowing down of the Indian economy due to various factors such as decline in exports and drop in private investments. Both manufacturing and construction sectors are facing a severe crisis.

The demonetisation and the introduction of Goods and Services Tax (GST) exacerbated the crisis of the manufacturing sector that grew by just 1.2 per cent in the first quarter of 2017-18, as compared to the 5.3 per cent in the preceding quarter in 2016-17. At the same time, the unorganized sector has also been adversely affected as the demand for components from manufacturing units fell.

The Banking sector, which is facing the crisis of NPAs (bad debts) and the imminent threat of mergers, is the latest in line to announce job cuts. YES Bank has eliminated about 2500 jobs, more than 10 per cent of its work force. Earlier, HDFC Bank had cut its workforce by 11000 employees over three quarters up to March 2017.

In January 2017, the International Labour Organisation (ILO) had predicted that globally the number of jobless people will have increased by end of the financial year 2017-18 to over 20 crore. In India the number unemployed would be 1.8 crore people, nearly 10 per cent of the global unemployed. The vulnerability of those employed was also predicted to increase across all countries and more so in some countries, including India.

Tag:    job cuts    GDP    Economic crisis    Oct 1-15 2017    Struggle for Rights    Economy     Rights     2017   

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