Nevertheless, keeping the spotlight on innovation, keeping business competitiveness alive nationally, continuous product expansion and on-going investments in all facets of the business are critical to facing and recovering from a slowdown.
By Suchita Dutta
The Indian economy is slipping into a recession, which is quite apparent. The real GDP growth has gone down from a peak of 8.2% in 2016-17 to 6.8% in 2018-19, with the fourth quarter of 2018-19 dipping to 5.8%. With declining cash flow into the market, a gigantic employment shortfall has been the consequence. Significant employment-driving sectors including automobile, real estate and financial services—non-banking finance companies (NBFCs) in particular—and manufacturing are now showing signs of its adverse impact.
India’s economic growth has slumped for the fifth straight quarter to an over six-year low of 5% in three months ending June, as consumer demand and private investment slowed amid a deteriorating global environment. Although this has led to a reduction in the hiring of talents in sectors like telecommunications and automobiles, sectors like e-commerce and food tech have seen a spike or a continued demand for new hires.
The fact is that all jobs are not disappearing or reducing or on hold, these are true to only a few specific sectors. Hence, right now, the focus should be to ensure that in every sector employers create and deliver the right messaging to their employees around their organisational business goals, aspirations and intended strategies to combat this slowdown, rather than inflating the gruesome effect of it. We need to prep up the response mechanism if at all such a slump is in the offing.
There are real issues like the economy readjusting to the extended inflation expectations, banking crisis creating working capital issues and a global trade war that needs corrections, to rise above the job market challenges.
Job-creation challenge: How to nip it in the bud?
Widening the job contract window is pivotal. Since the majority offer on-the-job skilling, encouraging flexibility within the rigid labour laws to extend such yearly contracts can encourage firms to invest in skilling. Severe lack of talent and inconsistency in employee performance track record or ones having learnability issues will always be at risk—irrespective of an economic slowdown. The current workforce should engage in continuous learning to build awareness and knowledge of the trends shaping the entire global economy. It will help the current workforce in shaping their own learning paths. This extends to the contractual labour force as well. Labour-related reforms that support a healthy work environment and surface the absolute advantages of a formalised job market will surely usher in newer breakthroughs in job creation.
Wages are and will continue to play a significant role in the consumption pattern of an economy. Therefore, rectifying wages is important. The requirement for the government to step in with strong directives on the minimum wage code—that would act as a measure to increase the wage growth—is essential. It significantly declined due to certain policy reforms that were introduced to correct the macroeconomic imbalances.
Private consumption is seriously pulling down economic growth, and changes in the wage code can spur demand and savings. In fact, the International Labour Organisation’s 2018 report had also suggested policies to enhance wages and collective bargaining power, so that wages grow in tandem with labour productivity, more so since India relies on the progressive increase of domestic consumption by lower and middle-income groups, which is a key factor in overall aggregate demand. We have already witnessed the slug in the automobile market and the lesser interest amongst the millennials to own new cars, and not to happy festive demand.
Continuing the focus on improving ease of doing business; reform in factors of production, viz. land and labour; capitalising on opportunities opened up by the heightened trade tensions; and faster implementation of capital expenditures by public authorities, and similar other measures have the potential to inject growth impulses into the economy.
Organised flexi-staffing: Easing India’s employment struggle India’s struggle for employment problems is real. We are at a conjecture where human workforce and automation will coexist in the workplace, but to augur a healthy win for both sides, retraining the workforce in niche skillsets to manage and ride over the changing technology is becoming essential.
It is being seen that most organisations are looking at cutting down costs when it comes to training in-house, more specifically when the slowdown is omnipotent. With the increased volatility in the Indian economy, organised flexi-staffing is always the best option to adopt for both employers and employees. The crucial benefits of this industry have been time-tested, and helped it to proliferate. Today, India is the fifth-largest staffing market in the world. Flexi-staffing in India has grown by 16.3% in 2015-18, which stands at 3.3 million, and is poised to grow by 22.7% in 2018-21 to 6.1 million. Organised flexi-staffing removes the burden of the unorganised sector and brings a larger workforce into formal employment. The flexible staffing industry plays a key role in reducing both unemployment and undeclared work.
In order to bring in more structure and balance into the labour market, the organised flexi-staffing industry needs to grow. For their healthy growth and to curb any frivolous activity of unorganised staffing firms that can hinder the organised staffing adoption amongst the corporates, licensing of the staffing firms is imperative. The government must consider issuing national licences and a single universal enterprise number to staffing companies to operate.
Nevertheless, keeping the spotlight on innovation, keeping business competitiveness alive nationally, continuous product expansion and on-going investments in all facets of the business are critical to facing and recovering from a slowdown. Building a parallel pool of well-groomed, easily accessible, economical and future-proof talent who can survive the slowdown sooner than any other geography on the back of a resilient domestic consumption market is what the Indian economy needs now. When dealing with an upcoming slowdown, it’s important to buckle up and attune strategies, policies that direct towards a solution rather than repeatedly citing the problem.