Jobs growth slows in past 2 years, core companies hit hard

New Delhi: The pace of employment growth in India slowed in the last two years with job creation growing at 3.9% in 2017-18 and 2.8% in 2018-19, a study by ratings agency CARE Ratings showed.

Based on a set of 1,938 companies spread across sectors, the study said the value of sales in FY19 was Rs 69 lakh crore, thus covering the entire corporate sector. It includes all listed public sector entities but the SME segment may find less representation in this sample.

As per the study, the aggregate headcount or employment increased at a CAGR of 3.3% over a four-year period from 2014-15 to 2018-19 compared with a CAGR of 7.5% in gross domestic product (GDP) during this period.


Growth in employment on an annual basis was 2.5% in 2015-16 and 4.1% in 2016-17. The Periodic Labour Force Survey (PLFS) released in May showed the unemployment rate at 6.1% in FY18, a 45-year high, but the government said this was not comparable with earlier years because of the change in methodology.

“Therefore, there is a case that supports the argument that employment growth has not been commensurate with GDP growth with a difference of 4.2% in CAGR during this period,” the study showed.

It showed that around half the companies had witnessed a decline in growth in employment over this period while 35% of them had witnessed growth of 11.5% on the aggregate, each with an above average CAGR of 3.3%.

CORE WORRIES

The ratings agency highlighted that core industries have witnessed “virtually negative growth in headcount”, with crude oil just about maintaining the employment level. These industries have been impacted by the slowdown in GDP growth as well as the challenges on the NPA side for banks.

A similar picture is seen for the heavy investment industries where growth has tended to be negative for power and capital goods, and just 0.4% for infrastructure.

However, consumer-oriented industries showed a varied patter.