Jobs are adding up, but only in big companies
More than 40% of the sample firms show job contraction in FY18, says a report by CARE Ratings
For two consecutive years, smaller firms have reduced the number of people on their payroll, while bigger companies have added job seekers at the fastest rate, a recent study has shown. In the 1,610 companies studied, jobs grew by 3.8 per cent in 2017-18, slower than 4.2 per cent growth achieved in 2016-17, but faster than 2.5 per cent in 2015-16. ABHISHEK WAGHMARE writes
For two consecutive years, smaller companies have cut jobs, while bigger companies have added job-seekers at the fastest rate, a recent study shows. In the 1,610 companies studied, jobs grew by 3.8 per cent in 2017-18, slower than 4.2 per cent growth achieved in 2016-17, but faster than 2.5 per cent in 2015-16. The growth in salary bills for those companies has been fairly constant near 8-8.5 per cent for the last three years. However, the average salary per employee is growing slower and slower. It grew by 4.3 per cent in 2017-18, dropping from than 4.8 per cent in 2016-17 and 5.8 per cent in 2015-16.
These are the findings presented in the report on employment in the corporate sector by CARE Ratings, by analysing the annual reports of 1,610 companies in India covering major sectors. The net sales of these companies form about 60 per cent of net sales of a sample of more than 12,000 companies representative of the corporate sector.
Among economic sectors, retail and financial services recorded double-digit employment growth of about 13 per cent, while construction and infrastructure sectors grew jobs at above 9 per cent, bettering the average of 3.8 per cent.
Telecom showed a job contraction of 7.6 per cent, but the sample excludes Reliance Jio, skewing the number given that Jio’s entry rattled the incumbents in the telecom sector. Among the sectors that are the biggest employers, the crude oil industry, which includes refineries and oil marketing companies like Indian Oil Corporation and Hindustan Petroleum, showed employment growth of 1.8 per cent in 2017-18, plummeting from 26.8 per cent in 2016-17. Banking and auto sector showed a 10 per cent growth.
Small isn’t beautiful
Of the 1,610 companies, 705, or more than 40 per cent, have shown job contraction. Smallest of them, with net sales less than ~500 million, showed a 3.9 per cent contraction in their payroll in 2017-18, after a 7.3 per cent contraction in 2016-17. The biggest in the lot, those with sales above ~100 billion, witnessed a 4 per cent growth in jobs in 2017-18, improving from a 3 per cent growth in 2016-17. This has not been the natural trend in India, but has surfaced only after the industry went through demonetisation, followed by the implementation of the goods and services tax (GST).
“Smaller companies were actually the ones consistently adding the jobs, but job contraction in small companies is a recent trend. As the small and medium enterprises were the most affected during demonetisation and GST, the companies in the top line got affected,” said Madan Sabnavis, chief economist at CARE Ratings, and the lead author of the report.
Job growth in companies that employ 5,000-10,000 people has slowed down from 15.4 per cent to 2.3 per cent. In absolute numbers, the number of employees in these 1,610 companies grew from 5.4 million to 6 million in three years to 2017-18.
Smaller companies are at a greater loss when the economy is facing a credit crunch, said former chief statistician of India, Pronab Sen. Agri, education and jewellery sectors worst hit
The report juxtaposes the growth in company sales with the growth in number of people they have employed. Education is one sector which has witnessed negative sales growth as well as negative jobs growth. Jewellery, agriculture, and hospitality sectors have registered negative growth in one of the indicators. All other sectors have shown positive growth in both.
This means that while employment is rising across most of the sectors, the contraction of jobs is a phenomenon experienced by smaller companies.