India Inc. was in slowdown mode in hiring in FY24: Study

Even as the government is banking on the private sector to take forward its new schemes on employment and skilling, a new report has revealed that India Inc. was in slowdown mode in terms of hiring last fiscal despite better economic growth.

The study by Bank of Baroda based on a sample of 1,196 companies, found that growth in employment was just 1.5% in FY24 compared with 5.7% in FY23. In absolute terms, the number of employees in these companies rose by 90,840 in FY24 to 6.25 million. In comparison, the headcount increased by around 333,000 in these firms in FY23 to a total of 6.16 million employees.

“It can be said that the employment growth scene in India Inc. was quite lacklustre when looked at the aggregate level. Higher growth in FY23, the base effect, can only partly explain the low growth of 1.5%. There was no clear linkage with growth in sales which means that the decision to increase or decrease headcount was more about industries in general,” said the study.

It identified sectors including retail, trading, infrastructure, reality, iron and steel and finance as sectors that were job accelerators with double digit growth in hiring in FY24. “They have tended to be more in the services sector and infra based segment like steel and construction. The big boost to housing witnessed partly due to the government push has resulted in the realty sector hiring more staff. Retailing and trading have been at the forefront in terms of creating jobs with the highest growth rates. Finance continues to be an accelerator as NBFCs have been spreading their reach across the country which means hiring more staff,” it said.

Others such as telecom, plastic products, banks and FMCG were the job creators where growth in hiring was between 4% and 10%. Minimal or flat growth was also seen in several sectors such as media and entertainment, insurance consumer durables, chemicals, crude oil and construction material.

It also identified ‘job destroyers’ as a significant group where there was fall in headcount in FY24. “Clearly, this was a case of companies resorting to downsizing which could be motivated by a variety of reasons,” said the report. IT, textiles, power, electricals, hospitality, and business services were sectors that registered a decline in the total headcount.

According to the study, a reason for this slowdown in hiring at the aggregate level was that FY23 was the first year post-pandemic when there was a certain degree of voluntary and involuntary displacement of staff. “Therefore, there was a tendency for growth in employment to be higher in FY23 as activity was ramped up. The same necessity was not felt in FY24 resulting in a lower growth rate,” it said.

It, however, cautioned that the sample includes only the large to medium companies and excludes the micro and small enterprises. “Also, this was a period when companies in certain sectors have gone in for rationalisation of staff based on their business levels and prospects,” it noted.