Job creation in India to remain subdued for at least a year; salary growth nosedives in Q1

Job creation in India to remain subdued for at least a year; salary growth nosedives in Q1

The job creation in the country may struggle in the coming months as the Indian economy is expected to take more than a year to revive. It is also expected that the use of technology to substitute labour would increase, reducing the demand for labour, said a report by Care Ratings. The employment growth number for FY21 is likely to contract for several industries, especially in the services segment. In contrast, IT, banking and finance will continue to be the job creators as they have been less impacted by the coronavirus-led lockdown, the report added.

The revival in demand will largely determine the growth in employment for consumer-oriented industries while investment trends may drive the same for the capital goods related industries.

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Employment condition in the country was already daunting before the pandemic kicked in, further, a series of lockdowns pushed the job creation number from the cliff. A survey from the rating agency showed that for a larger sample of 4102 companies, the employee remuneration growth was 8.5 per cent in FY 20, compared to 10.3 per cent in FY19. However, the situation worsened with the same falling to a mere 4.6 per cent in Q1 FY21.

The fall in the remuneration growth numbers have been attributed to the combination of lower salary pay-outs as well as job cuts in several industries. The lockdown has impacted sectors such as hospitality, real estate, media and entertainment, aviation etc. besides consumer discretionary spending-oriented sectors such as durables and automobiles.

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Further, the sharp cuts in headcount through layoffs is expected to reflect in the current fiscal’s annual report. Meanwhile, nearly 2.1 crore salaried employees have lost their jobs by the end of August. There were 8.6 crore salaried jobs in India during 2019-20, which fell to 6.5 crore, according to the Centre for Monitoring Indian Economy.  The deficit of 2.1 crore jobs is believed to be the biggest among all types of employment.

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