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India – Contract workers bearing the brunt of redundancies

10 September 2013

Employment creation in India’s eight key industrial sectors, for the three months ending 30 June 2013, slumped compared with the previous quarter, according to new employment data released by the Labour Bureau, showing the extent of the downturn in the economy.

The survey, which covered 2,300 industrial establishments across India, found that contract workers bore the brunt of redundancies during the period, with at least 20,000 contract workers losing their jobs during the quarter.

Overall, the eight sectors, which include manufacturing and services, added 86,000 jobs between April and June, a fall from the 107,000 jobs created in January-March, according to the eighteenth employment survey by the Labour Bureau.

The overall performance would have been worse but for the apparel and textile sector that added 88,000 jobs in the three months, up from 40,000 in the preceding three months. No other sector increased employment. Two sectors, metals and transport, increased redundancies by 40,000, with 38,000 of these jobs being lost in the metals sector alone.

In the previous six months, June-December 2012, 168,000 jobs were created. The labour bureau did not conduct a quarterly survey for that period, instead opting for a six-month survey.

According to the survey, the Indian economy, Asia’s third-largest, is trying to emerge from a slump that caused growth to plunge to the lowest in a decade, which was +5% for the fiscal year ended 31 March. High interest rates, delayed project approvals, and slowing consumer spending have caused companies to put investment on hold, and freeze or cut their workforce.

Deepak Mehra, a joint director with the Labour Bureau, commented: “This survey was conducted to gauge the impact of economic slowdown on the employment scenario in the country. This may not give an exact view but indicative of the job scenario.”

Jobs in some sectors; such as information technology and business process outsourcing (IT/BPO), handlooms, gems and jewellery, and automobile industries, were almost stagnant, according to the survey.

Rituparna Chakraborty, senior vice-president at recruitment and training company Teamlease Services Pvt Ltd, added: “The problem with government data is that they are stuck with the old industry sectors. I think, there is job creation in other sectors like e-commerce, fast moving consumer good sectors. There is growth in job creation in the organized staffing industry as well. But government does not look at them in their surveys.”

Chakraborty said she was optimistic that job creation would increase for the next six-eight months beginning with the festival season. “After that if the economic mood does not improve, it will have serious impact,” she said.

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