No banking on new hires
The financial sector— banking, insurance and other financial services taken together— is the second largest white collar employer after IT services. The ASSOCHAM survey shows a decline in the hiring trend between the January to March quarter and the April to June quarter from over 20,000 jobs to over 17,000. The steepest decline of over 20 per cent is in the insurance segment. It is also the segment which the Government could boost with reformist legislation, but has made little progress in doing so.
The financial sector bore the brunt of the global economic crisis between October 2008 and March 2009. That period was the first time post- liberalisation that white collar workers were laid off in large numbers as banks and insurance companies, particularly those with foreign equity and those in the private sector, were squeezed.
The scenario for 2012- 13 may not be as dire as in 2008- 09, but it isn’t even half as good as in the post- crisis year of 2009- 10 when the sector grew by 31.6 per cent. A forecast by Kotak Institutional Equities says the sector is expected to grow 14- 15 per cent in 2012- 13. Foreign banks have already begun adjusting their workforce. Citigroup cut 100 jobs in its India operations in January. HSBC has asked 300 people to leave in the past few months.
Indian banks were relatively immune from the global financial crisis of 2008. In 2012- 13, they are more vulnerable because of a significant rise in nonperforming assets. A slowdown in economic growth coupled with high interest rates is a nightmare scenario for repayment of loans. The infrastructure sector, particularly coal and power, could cause serious problems for banks. Several projects are held up because of environmental problems and problems in the supply of inputs like gas and coal. The probability of default on debt is high. Drawing a parallel with the US banking crisis of 2008, a senior industry representative says “the power sector could be the subprime crisis of India”.
In a gloomy scenario, it is tough to find a job. Mohit Gulyani, a 35- year- old banking professional in Mumbai, regrets the day he left a stable job in a global research agency for a brokerage firm in December 2011. He had been at the brokerage for barely three months when the company shut down in February 2012. “I have so many years of experience but I couldn’t find a job!” After four months he settled for a relatively junior job in a foreign bank.
“I had taken a car loan in January and my wife is a homemaker. I really had no choice,” he says. Gulyani is not the only one who is settling for jobs they are overqualified for. There are reports of people dressing down their CVs so that they do not appear overqualified for jobs that are available. Gulyani’s advice for those who have a job is simple: “Right now, it is best to stay where you are.” That would be of little solace to those desperate to switch.
The Government could help boost the financial sector. A long pending bill to raise the FDI limit in insurance from 26 per cent to 49 per cent would give a fillip to the sub- sector of financial services which is showing the greatest decline in employment prospects. However, with Parliament stalled and Government in paralysis, the light for reform is very dim.