A recently released report by credit rating agency CARE Ratings Ltd. reveals that the rate of employment growth in India has slowed down in the last 1 year as compared to the preceding period. The report has been prepared basis published annual reports of 1610 companies across 33 different sectors.
The available data shows that in FY2018 (Apr’18-Mar’19), the total employment no. grew from 5.78 million to 6.03 million, i.e. a growth of 4.3%. This is nearly 2 percentage points less than the growth in employment (6.2%) witnessed in FY2017. During FY 2018, the 3 largest sectors in terms of employment share were Banking (21.0%), IT/ITES (20.4%) and Auto/auto ancillaries (7.4%). What is worrying is that two of the above 3 have witnessed a decline in employment growth rates from FY’17 to FY’18 (exhibit below):
In terms of sector-wise view, the 33 sectors surveyed can be classified into 3 groups:
Sectors where employment growth has been higher than the overall growth rate of 4.3% :
Sectors where employment growth has been positive but less than the overall growth rate of 4.3%:
Sectors where employment growth has been negative i.e. de-growth:
While the above survey only represents a sample of companies, one thing worth noting here is that these companies are largely representative of large enterprises and doesn’t include MSMEs which are typically more affected by uncertainty in the external environment. Inclusion of MSME data is likely to see a lowering of the 4.3% growth rate.
In recent months, several metrics have been indicating the stress on the economy. In June, CMIE data revealed that unemployment was at a 33-month high of 7.91% while employment rate fell to 39.42%, it’s lowest since Jan, 2016. This week has seen the central Government taking steps to boost the economy, including transfer of Rs 1.76 crores to the government and relaxing FDI norms in several sectors like single brand retail, digital media and manufacturing sectors. IPD is hopeful that the measures are effective in turning around the present sluggish state of the economy.