In what could provide a major fillip to India’s economy, a latest report indicates that corporates’ hiring outlook is relatively robust in the coming years.
In what could provide a major fillip to India’s economy, a latest report indicates that corporates’ hiring outlook is relatively robust in the coming years. According to a UBS survey of 247 C-suite executives, 50% of the firms expect the pace of hiring to be faster compared to last year. Further, their hiring plans are in line with expectations of changes in demand.
However, the increases in hiring will likely be more for temporary jobs, accentuating the India’s job quality problem and the resulting ‘slowing middle’ in India. The report noted that many of these firms have not taken into account the new automation techniques’ impact on their hiring plans. “Nearly two thirds of the surveyed firms expect salaries to increase less than 10%. Many firms were unaware of AI/blockchain, and many others have not invested in these areas. New automation techniques have yet to impact hiring plans,” noted the report.
According to UBS estimates about 4 million jobs can be created per annum over the next five years, up from 2 million per annum in the past five years. “Our base case for job creation implies 7.5% GDP growth and 12-15% Nifty earnings growth over the next five years, but downside risks for the next two years,” noted the firm. Further, most firms expect an increase in the nunber of employees (7% average increase), and their hiring plans are in line with expectations of changes in demand. Job quality may be worsening, with a tilt towards temporary workers, UBS said.
Sharing their outlook about the company’s GDP growth, UBS analysts Gautam Chhaochharia and Sanjena Dadawala said that there will be gradual recovery and and Nifty earnings growth of 13%/15% in FY19/FY20. “This is an improvement over FY18, but more a reversion towards pre-disruption levels. Although India’s demographics are better than its peers’, the best of the growth boost from its demographic dividend is likely behind it. However, based on our scenarios that take into account the government’s policy push, the economic cycle and under-penetration, we expect job creation to pick up,” the analysts noted.