Demonetisation could take away 400,000 jobs
NEW DELHI: With demonetisation set to reduce India’s economic growth by 1% over the next one year, the job market is likely to see over 400,000 job cuts.
You should worry if you work in the e-commerce sector, since firms could handover around 200,000 pink slips in the next one year. “Cash on delivery being almost 70% of the overall e-commerce business, the sector is likely to take a hit and lose almost 20% of their headcount in the next few months,” said Rituparna Chakraborty, co-founder at staffing firm Teamlease Services. E-commerce firms employ around 1 million people in India.
“Companies manufacturing and selling luxury goods would also be immediately impacted,” Chakraborty added.
Real estate, construction and infrastructure are the others that are likely to feel the heat. Recruiters expect the sectors to lose over 100,000 jobs in the next 12 months.
“For the next six to eight months, we could foresee job losses and freeze on hiring. Moreover, if the government’s objectives (related to demonetisation) are not be met, we should expect more challenges,” said Anandorup Ghose, director at US-based HR consultancy Aon Hewitt. “The impact of the move will be felt across sectors dealing with discretionary spending, including real estate and auto.”
Besides, the textiles and garments industry, which employ a substantial number of daily wagers, could be hit hard. Of the 32 million people employed by the industry, one-fifth are daily wagers, those who mostly get paid in cash. “While on one hand, slow sales increase the possibility of stock returns to manufacturers or affect the order book for the next year due to unsold inventory; on the other, slow sales and consequent liquidity pressures on retailers can result in stretched payments to manufacturers,” according to rating firm ICRA. Similarly, 20% of the 250,000 workers in the leather industry will also be impacted.
The impact on the job market could become severe if the recovery of cash supply in the system remained sluggish, experts said. “The impact on the job market depends on the how fast the economy recovers, how fast the money is supplied in the economy, and when the restrictions on cash withdrawals go,” said Soumya Kanti Ghosh, chief economic adviser, SBI.
According to global financial services major HSBC, demonetisation will bring some short-term benefits for sectors, including financial technology, digital wallet and banking.