Growth failed to add jobs

Despite the Indian economy growing at the fastest pace in the world in the financial year 2014-15, the country appears to seen a near zero percent growth jobs as it created only 12,760 new jobs in the fiscal.

According to a study conducted by Care Ratings on employment growth in the corporate sector, 2,01,105 jobs were added in FY12 when GDP growth was lower based on the old methodology, while in FY13 it was lower at 87,193. Higher GDP growth in the economy in FY14 relative to FY13 did bring about a higher increase in employment but this was not replicated in 2015.

“There is no clear explanation for these variations as at times employment increases when companies expect future conditions to be buoyant and turn conservative when these conditions do not materialise,” said Care Ratings chief economist Madan Sabnavis.

The Care study on trends in employment in the last four years is based on employment numbers provided by a sample of 1,072 companies across various sectors in their balance sheets and hence does not include the impact of outsourcing.

IT, banking and financial services were the only sectors to witness positive growth in FY15.

Manufacturing witnessed a negative growth of 5.2 per cent. Positive compounded annual growth rate was seen in the sectors such as consumer food (14.7 per cent), plastic products (4.5 per cent) automobiles (2.5 per cent) and household & personal products (5.5 per cent).

Sectors which have shown negative growth include electronics (-4.5 per cent), engineering (-6.6 per cent), telecommunication (-7.9 per cent) and textiles (2.6 per cent). Other sectors with a negative growth in FY15 were non–financial services (-17.4 per cent), construction (-17.1 per cent) and mining (-3.8 per cent).

Discussing the growth sector-wise, the study says the manufacturing sector had the highest share in employment, accounting for more than 40 per cent of the employment, followed by banking (23.0 per cent) and IT (18.4 per cent).

This means that the future of job creation would largely be dependent on the growth in these sectors and the low growth in the last 3 years in the manufacturing sector is a cause for concern.

In FY16 too, the growth has ranged around three per cent as this sector has been affected on the demand side which has led to lower production and less demand for labour.

According to the study, the IT sector witnessed the highest growth in employment with a CAGR of 12.7 per cent which is reflective of the demand for such services and the better performance of the IT companies in terms of business prospects.