5 Lakh to 50 Lakh

Job security has always been a luxury of the white-collar urban worker, who comprises less than 5 per cent of the total workforce. For the vast majority of Indian workers—like temporary workers in factories, contract workers with exporting units—losing a job is an ever-alive threat. But even these workers had witnessed 4-5 years of unprecedented boom in jobs and income. Now, given the severity of slowdown, businesses are laying off workers in hordes. A recent survey by the Ministry of Labour and Employment found that almost half a million jobs were lost in the three-month period from October to December 2008. The sectors that got rid of the maximum number of workers are mining, textiles, metals, gems & jewellery, automobile and transport. The worst affected among these were gems & jewellery, transport and automobiles where employment has declined by 8.5, 4 and 2.5 per cent, respectively. Says the ministry in its report, “Credit availability and its cost have become major areas of concern. The combined impact of all these factors would be loss of employment and reduction of income leading to social distress.”

The virtual disappearance of demand for Indian exports has impacted the export-oriented units, which employ an estimated 150 million people. The majority of labour intensive export industries like textiles, handicrafts and gems & jewellery are reporting a fall in turnovers. The Federation of Indian Export Organisations (FIEO) actually pegs the job losses in the exporting units at much higher levels than estimated by the government. Says A. Sakthivel, President, FIEO: “Our estimate is that almost 2.5 million workers have already been laid off by exporters. If you factor in indirect job losses, including ancillary units, the number would be almost double at around 5 million.” FIEO estimates that unless global demand picks up, by the end of the fiscal almost 10 million jobs would be lost. While FIEO’s projections, economists feel, are on the higher side, a more accurate estimate of the informal sector job loss could be two million, which will go up in the weeks to come.

Job losses of such magnitude not only have social implications, but could also add to the dampening of demand that is already evident among more prosperous urban consumers (see page 74). This could also jeopardise the prospects of a relative buoyancy in rural demand, given that agriculture production is set to register a positive growth for the fourth consecutive year in 2008-9. Says Abheek Barua, Chief Economist, HDFC Bank: “The rural economy has picked up in recent times with even some reverse migration from the urban industrial centres. But if the job losses continue to mount, particularly in manufacturing, it would definitely have a detrimental impact on demand”.