On Monday, Paytm’s parent company, One97 Communications, announced “a slight reduction in workforce” to cut costs. Media reports pegged the number of jobs lost at more than 1,000, or close to 10% of the company’s workforce.
Paytm is just one among many which have been slashing jobs after a prolonged funding winter and investors demanding revenue and profit visibility. As per layoff.fyi, 16,298 persons have been laid off so far in 2023. The number is expected to be much higher considering that many of the 125 companies that announced layoffs didn’t give the actual number of people they let go.
The Information last week reported that Google is mulling a substantial reorganisation of its 30,000-strong ad sales unit following its top-gear adoption of AI, sparking fears of potential job cuts. This is after laying off close to 12,000 employees thus far in 2023. And so, as the year draws to a close, the key question facing India is if its impressive growth can create enough jobs amidst the greatest disruption of all—the advent of artificial intelligence (AI).
Hiring is also seeing a slowdown. Campus placements at both engineering and B-schools, irrespective of their hierarchy, have been a cause of concern. At India’s premier engineering college—Indian Institutes of Technology—the number of offers rolled out by consulting, core engineering, and trading companies has dipped compared with the previous year. A recent analysis, based on data from a specialist staffing firm, found there has been a sharp decline in job postings in India by the tech biggies—Meta Platforms, Amazon, Apple, Microsoft, Netflix, and Alphabet.
As per the Naukri JobSpeak Index, a proxy for white-collar recruitment in India, the October-November showing was lower by 12% over the corresponding period in 2022. The larger share of the blame, of course, lies with the slowdown in IT hiring—even though this has stabilised over the last six months.
Skill doom is yet another dimension. RPG Group chairman Harsh Goenka believes that while people are complaining about unemployment, his company is facing a shortage of ‘skilled’ workers. According to Goenka’s post on X, “We want construction workers— we can’t find enough! We want truck drivers— huge shortage! We want plantation workers— they are not available! Can’t understand solution.”
Overall hiring by the IT sector in October-November was 22% below the level seen in the corresponding period last year. The slowdown, however, needs to be studied segmentally, given that new job postings in AI-related fields such as machine learning and full-stack data science are up 64% and 16%. Non-IT hiring in recent months has been the saving grace. But given the IT sector’s dominance of services sector hiring, it is bad news for India if the freeze carries over to next year.
The most important factors are, of course, the global growth outlook and the spread of AI across sectors. The IMF’s baseline forecast from October 2023 is for global growth to slow from 3.5% in 2022 to 3% in 2023 and 2.9% in 2024—well below the 2000-2019 average of 3.8%. Emerging market and developing market economies are projected to fare a lot better than developed economies, and, just last week, a report from a global financial agency forecast strong growth for India, though below the potential it calculates for the country if key reforms, especially in labour and human capital development, are undertaken.
So, what should concern policymakers in India here is 2024 should not be jobless growth. Writing in The Hindu, Zico Dasgupta and Amit Basole of the Azim Premji University say the lack of opportunities in the formal sector—reflected by the virtually static employment growth rate of salaried workers in the non-farm sector over the last four decades—has a lot to do with the fact that the positive effect of output growth has failed to counteract the adverse effect of labour-saving technologies.
To that end, the country needs to look at the right policy environment that could spur jobs, experts say. Boosting employment and job creation can start with adoption of the four Labour Codes by the state with the rules notified not showing too much divergence (which is the case at present). Another key goal should be investment in human capital development. A report by Teamlease Digital found that just 10% of the 1.5 million engineering students graduating this year will find a job, thanks largely to the global slump and IT companies preferring mid-level professionals to freshers whom they have to train, incurring time and financial costs.
At the same time, the employability of the graduates remains crucial to hiring decisions with less than half the engineering graduates estimated to be meeting market criteria. Investing in upskilling of the existing graduates, school and college education, healthcare, and public sector jobs would be an imperative for rekindling faith in India’s employment and productivity potential.