Why You Will Find It Tougher To Get A Job In 2016

jobs India

It is generally known that job creation has slowed down in India but precise and worrying details on how bad it is are emerging now.

A detailed survey of 1,072 companies including some of India’s biggest and their workforce conducted by rating agency CARE across a 4-year period from 2011 to 2015 shows that employment growth increased just 2.7%, from 4.3 million to just 4.8 million.

In the last year or 2014-15, only 12,760 jobs were added, which amounted to just a 0.3% growth in employment numbers. “Growth in employment has not been smooth, with the rate slowing down in alternate years,” Madan Sabnavis, Chief Economist of CARE Ratings told this writer.

A limited conclusion from these figures also suggests that there is low linkage between GDP growth and employment: higher GDP growth in 2013-14 (relative to 2012-13) did translate into a higher increase in employment but the same phenomenon did not repeat in the subsequent year.

According to Sabnavis, this is already borne out in slowing Index of Industrial Production (IIP) numbers and insufficient capacity utilization. IIP in fiscal 2015-16 till February was just 2.6%. He feels industrial growth should be at 8% if we are looking for sustained GDP growth of 7.5-8%.

It gets more worrying when you dive deeper

Manufacturing, which has a 43% share of jobs, has thrown up what can be best termed as severe stagnation - a compounded average growth rate (CAGR) of just 0.2% over the 4-year period. For 2014-15, manufacturing performed even more badly, showing a negative growth of 5.2%.

This figure shows up poorly against the efforts to push the Make In India agenda though expecting quick results might not be fair. Equally, it reflects the daunting task ahead.

Banking with a 23% share of jobs is next up but has grown slowly too, growing at 4% over the 4-year period and 2% in 2014-15. It could of course be argued that given the rapid advancements in banking technology, any growth is a bonus.

Information technology (IT) with a 18.2% share of jobs saw the highest growth in employment with a CAGR of 12.7% over the 4-year period, while for 2014-15, it grew a robust 21.7%, suggesting that Indian IT companies still have a lot of steam, despite the threats of automation looming large.

If you look at 2014-15 figures again, sectors like consumer food (14.7%) plastic products (4.5%) and automobiles (2.5%) showed growth but areas like electronics (-4.5%), engineering (-6.6%) and telecommunication (-7.9%) showed negative growth.

Now, while this sample is only of 1,072 companies, bear in mind that this covers all the major Indian companies including those in the Bombay Stock Exchange Sensex and National Stock Exchange Nifty.

Thus, the trends displayed here have some bearing on what is happening in the rest of the economy.

Let’s break this up further with some analysis:

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  1. India has showed consistent to high GDP growth in the last few years but the correlation with jobs is not that clear, at least from this data set. This is something to keep in mind particularly when shaping the policy narrative on growth or using GDP numbers as a proxy to assume that all is well on the jobs front.
  2. It is entirely possible that companies outside this data set are leading job creation. But as this report in IndiaSpend says, the last quarterly survey by the Labour Bureau showed India created the least jobs in 2015, since the survey started in 2009 – only 135,000 jobs compared to 900,000 in 2011 and 419,000 in eight labour intensive industries surveyed.
  3. New service industries including those which are in the start-up space are creating new jobs. But as reports increasingly show, in many cases, it was a 2-3 year phenomenon with layoffs shrinking the workforce as well. While the net figure should be positive, it is a little early to measure the total contribution.
  4. Government jobs are shrinking too. An Indian Express report on the same theme says Government jobs which were 19.5 million in 1996-97 are about 17 million today. More and more states are seeing violent agitations by youth demanding quotas or jobs. As this IndiaSpend report illustrates, even computer science engineers were protesting on the streets of Haryana during the Jat protests in February.
  5. Almost all traditional job creation engines, for instance manufacturing, banking and finance, face technology threats. And so do newer industries like information technology. Almost all CEOs of IT companies I have interviewed, particularly in the last year, acknowledge that headcount growth could start tapering off in the coming year or two.

    Some say they are already under pressure from clients to cut their service fees and increasingly use automation. Studies of workforce composition and patterns suggest that almost 45-50% of jobs can be automated using automation technology that is within reach in coming years.
  6. And then there are other worrying statistics. Some 40% of working people can’t find a job that lasts through the year. And education actually makes it worse because those who are educated would prefer to wait for the right opportunity.

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It’s not all bad news. India still has opportunities to grow. The nature of jobs will change or get created in different industries. There is still hope in manufacturing but not the same job intensity that was perhaps there earlier. Equally, banking and financial services will continue to grow but technology can eat away quite a few intermediate jobs.

But all this will take very hard work. India has a pretty large productivity upside too but that also does not mean more jobs. Its time to start thinking about what industries India (if you are around) really needs in the coming decade and then see if you have a profile that fits it. Else, its time to reskill or change your profile.

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