From the editor- in- chief
The two most important numbers which the mandarins of any economy have to watch are inflation and employment. Unfortunately, this Government has failed on both counts. Inflation still stands at around 7.5 per cent and now there is evidence of lower job creation for the middle class. The turning point on jobs came sometime in the first six months of 2012, a period in which GDP growth averaged a miserable 5.4 per cent. There was plenty of anecdotal evidence floating around about how difficult it was to get a new job, or even to change jobs laterally. Now, there is more scientific evidence which confirms that trend. Two surveys released in the first week of September show that a bogged down India Inc has lost its appetite for hiring. Interestingly, both the surveys, one by FICCI and the second by ASSOCHAM, were conducted by organisations that know exactly what is going on inside the offices of India’s leading businesses. That makes them credible. It also makes them a source of real worry for millions of youngsters who are seeking an appropriate entry into the workplace this year.
The worst affected sectors are the ones which are also the most employment intensive. The Information Technology ( IT) sector, which generates the maximum number of white- collar jobs, is badly affected by the persistent slowdown in the West. More than 70 per cent of the sector’s revenues come from overseas. With no sign of sustained recovery evident in either the US or Europe, job generation in IT will suffer for the foreseeable future. But, according to ASSOCHAM’s survey, IT is just one of 27 sectors that has shown a decline in hiring in the period between April and June when compared with the three- month period between January and March this year. The reasons for the slowdown in other sectors lies not in the US or Europe but very much at home.
The UPA Government is the main culprit for the macroeconomic mess which has seen fiscal deficits soar, current account deficit worsen, inflation remain stubborn and growth collapse all the way from 8.4 per cent in 2010- 11 to just over 5 per cent now. At the base of it all is the Government’s complete inability to take even routine decisions. All its energies are devoted to fire- fighting scams, rather than propelling the economy. Sectors as diverse as telecom, retail, insurance, automobiles, infrastructure and real estate are suffering because of the Government’s indifference. When decisions have been taken, they have been detrimental to the private sector which is the main engine for the creation of productive jobs. The irony is that all these sectors were booming just a few years ago.
Our cover story, written by Deputy Editor Dhiraj Nayyar with Senior Correspondent Shravya Jain, analyses the latest trends from the job market. The picture is not encouraging at all. Also, the worst may be yet to come. So far, the main impact of the slowdown has been a fall in hiring. Unlike in the six months after the global crisis of September 2008, there hasn’t been significant downsizing. That too is likely to happen as firms get used to a low growth environment and adjust costs accordingly. Middle class youth are in for uncertain times.
It was the late Ronald Reagan who said while campaigning for the presidency against incumbent Jimmy Carter in 1980, “Recession is when your neighbour loses his job. Depression is when you lose yours. And recovery is when Jimmy Carter loses his.” Carter’s economic mismanagement hurt ordinary Americans many of who lost their jobs in the late 1970s. Reagan caught their pulse. Thirty- two years on, Reagan’s words ought to be an ominous warning for the bungling UPA.