As the Economy Slumps, How Many Jobs Is It Really Taking With It?

In both old and new sectors of the economy, lay offs and workforce reductions have been common since 2016.

New Delhi: Along with news of a slowing economy, piecemeal reports of job losses from across the country are pouring in too, from both old and new sectors.

Since aggregated data on these developments is hard to come by, the Indian Express has put together numbers from different sectors to try and get the bigger picture on India’s employment scenario since. In textiles, 67 units have closed between FY 2015 and FY 2017, which has meant that 17,600 jobs have been affected. This number is based on the Union textile ministry data, which is restricted to cotton and man-made fibre textile mills in the organised sector.

Capital goods company Larsen & Toubro laid off about 14,000 employees across businesses during the first two quarters of the fiscal year that ended on March 31, 2017. The company said the lay offs were a “strategic decision”.

Even more recently, in the first three months of the current fiscal year, three of the five biggest IT companies in the country have reported a reduction in their workforce. TCS’s workforce was down by 1,414 people, Infosys by 1,811 and Tech Mahindra by 1,713, Indian Express reported. Wipro Ltd and HCL Technologies Ltd, the other two in the five, reported net additions to their workforce.

Also read: India’s Export Slump and the Troublesome Rupee

Between January and March 2017, HDFC Bank’s total employee headcount came down by 6,096, from 90,421 to 84,325. The employee headcount had already reduced by 4,581 in October-December 2016. According to the Indian Express, other private banks are also cutting down on employees.

The renewable energy sector has also witnessed a reduction in jobs. Wind gear supplier Suzlon Energy Ltd and turbine maker ReGen Powertech reportedly retrenched over 1,500 employees in the last six months, and equipment maker Inox Wind Ltd has not paid parts of its staff for two months now, Indian Express reported.

A total of 212 startups shut down in 2016, 50% higher than the previous year, Indian Express quoted data analytics firm Tracxn as saying. The shutdowns have continued in 2017 as well, most notably with Stayzilla and Taskbob.

Also read: A Rising Real Exchange Rate Hurts India’s Exports

A paper by Vinoj Abraham published in the Economic and Political Weekly has used government data to highlight rapidly-slowing employment growth in the country since 2012. According to Abraham, there was an absolute decline in employment during the period between 2013-14 and 2015-16, possibly the first time this has happened since independence.

One explanation for the recent job losses in sectors like textiles and IT could be the high value of the rupee, which makes Indian exports uncompetitive. In a recent article in the Economic Times, T.K. Arun has argued that “The rupee is strong and its strength hurts India’s exports and thus overall growth and job creation.” According to him, keeping the rupee strong benefits the elite, but at the cost of all exporters, those seeking jobs in any export-related sector, small and medium enterprises, and overall growth in general.