Employment growth slowed down in last two years: Care Ratings

Our Bureau | Updated on November 19, 2019

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The aggregate headcount or employment had increased at a CAGR of 3.3 per cent between 2014-15 and 2018-19

There has been a slowdown in growth in employment to 3.9 per cent and 2.8 per cent in 2017-18 and 2018-19 respectively, according to an analysis done by CARE ratings.

The study involved 1,938 companies spread across all sectors. The value of sales in FY19 was Rs 69 lakh crore thus covering the entire corporate sector. It included all listed public sector entities too for which information is available. However, the SME segment found less representation in the sample.

The study reveals that the aggregate headcount or employment had increased at a CAGR of 3.3 per cent between 2014-15 and 2018-19 i.e. over a four-year period. In comparison, GDP grew at a CAGR of 7.5 per cent during this period. 

Ideally, the rate of growth in employment should be inclined to the growth in GDP, which is the broadest indicator of economic growth. “On an annual basis the difference between the growth rate in GDP and employment was 5.5 per cent in 2015-16, 4.1 per cent, 3.3 per cent and 4 per cent respectively in the subsequent years. 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 per cent in CAGR during this period,” Care Ratings said.

The table shows that around half the companies had witnessed a decline in growth in employment over this time period while 35 per cent of them had witnessed growth of 11.5 per cent on the aggregate each with an above average CAGR of 3.3 per cent.

Sectoral indicators

The core industries have witnessed, virtually, a negative growth in headcount, with crude oil merely 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 witnessed for the heavy investment industries where growth has tended to be negative for power and capital goods and only 0.4 per cent for infrastructure.

The consumer-oriented industries show a varied pattern: In the case of agricultural and durable goods there has been a deceleration in employment while there has been an increase for FMCG and textiles albeit at a lower than sample average of 3.3 per cent.

Published on November 19, 2019

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