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The palpable downturn in the Indian economy in the last two quarters is borne out by the trend in industrial output; data for January 2009, as for the previous month, show an absolute decline in output compared to a year ago. Now the result of that fall in manufacturing is beginning to show in the contraction of employment in various industries. Job losses in export-related industries were expected. Surprisingly, layoffs in industries catering to the domestic sector too a re on the rise if data for January are any indication.

According to a “quick survey” of 682 units in eight sectors spread across seven states by the Labour Bureau, the IT and BPO sectors have witnessed trimming of the workforce in January after a stable trend the previous three months; non-exporting sectors such as transport, construction, metals and automobiles show an increase in layoffs for January after a gradual scaling down of employment between October and December. For October-January, the data show a loss of 5.89 lakh jobs in the units catering to domestic markets, representing a drop of 1.17 per cent in January compared to a deceleration of 1.01 per cent in the three preceding months; the biggest fall was witnessed in the automobile sector of around 3.10 per cent. The Bureau’s data therefore suggest a mixed impact of demand contraction on organised sector employment with automobile units witnessing the steepest fall in employment among the surveyed units since October. On the other hand, the IT/BPO sector employment began to fall only in January. Interestingly, wages seem to have moved differently over the last four months, falling 3.45 per cent a month in the three months to December and stabilising somewhat in January when they fell just a quarter per cent. The limited sample may not warrant any firm conclusions about employment trends in the organised sector; anecdotal evidence suggests some BPOs and healthcare firms are expanding their workforce. The financial sector appears to have been downsizing but then the insurance sector with both public and private companies are expanding business and employment.

Such evidence suggests a churning in the organised sector, an adjustment that essentially captures the maturity of a competitive spirit. While some have been trimming labour costs and capex to cope with constricting markets, nascent industries such as healthcare, insurance and IT-related services not to mention public sector enterprises — banks and manufacturing units — reckon the present holds great possibilities. Both trends should stand the organised sector in good stead for the next business upswing.

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