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COVER STORY: JOB CRUNCH

You're Fired!

There's a new target in the firing line of the economy. Jobs. Blue collar or white. Government or private. Jet-setting executive or shopfloor worker. Jobs across the spectrum of the economy are being shed at a rate unseen in recent economic history. The Labour Ministry's latest estimates show that total jobs in the organised sector of the economy (i.e., the large-scale industry) shrank by 0.15 per cent in 2000. That translates into a net loss of 45,000 jobs in just one year in large industries alone (see chart).

Add to that figure the lay-offs in services (i.e. IT, finance, consultancy and many more) and the large-scale closure of small-scale industries, and the total number of jobs made redundant in the past five years touches a spine chilling one million. "Our study shows that while jobs grew at an average rate of 7 per cent in the past few years, in 2001 it is likely to dip by 20 per cent," prognosticates Gopal Krishna, CEO of executive search company Hewitt Associates.

Scary as it may sound the foreboding of such a bloodbath in the job market is writ large everywhere on the economy. On sliding growth indicators of industrial and agriculture production, on reports of stagnant investments, on the comatose capital market, on the bleeding balance sheets of some top-notch public- and private-sector companies and in the news of ever intensifying global economic slowdown.

The compulsions of opening up the economy and languishing basic infrastructure in the country have perpetuated and prolonged the downturn and made retrenchment more severe. So, while the economy has been opened up to competition, Indian industry has neither the tools to compete nor an exit path for escape. Explains Uday Kotak, vice-chairman, Kotak Mahindra: "Other global economies too go through the transition. But the structural reforms and regulations mitigate the pain. In India competition-driven consolidation is typically through mortality."

	VOICES
	"The job market in India will shrink by up to 20 per cent this year." Gopal Krishna, CEO, Hewitt Associates
	The human cost seems higher because we don't have safety nets in place." Anand Mahindra, MD, Mahindra & Mahindra

That is, the lack of quick and correct liberalisation has now begun to eat not only into companies' profits and market shares, but also into people's jobs and incomes. What aggravates the pain is the absence of social security. Points out Anand Mahindra, managing director, Mahindra & Mahindra: "It's a cleansing process. But the human cost appears higher because we don't have the safety nets in place." Also, the job market slide is happening at a time when an increasing proportion of the country's population is entering the workforce. The rate of employment growth should have been rising, rather than falling.

Absence of fresh investments is the cause for the halt in new job creation; cost-cutting by industry has evaporated replacement jobs. As the stories that follow detail, instances of companies cancelling recruitments, sacking employees either through a voluntary scheme or through outright retrenchment or just simply taking work off their employees are increasingly becoming common in corporate India.

Intriguingly, the distress isn't reflected in the overall growth of the economy that hasn't grown at less than 6 per cent in the past four years and will probably chug along the same growth rate this year as well. Explains R. Gopalakrishnan, executive director, Tata Sons: "The well-being of the economy is suspect as there is a clear conflict between the statistical evidence and anecdotal experience."

Where is the job market-and therefore the economy-headed? Warns Manvinder S. Banga, chairman of the Rs 10,600 crore Hindustan Lever Ltd: "There is a genuine crisis of growth in the country. It is time we faced up to it." Such warnings are not new, and therefore there is no guarantee of corrective action either by the Government or by business. This only points to a future grimmer than the present.

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