Beyond the hustle and bustle at the periphery, Chennai’s Guindy Industrial Estate wears a deserted look. A 50-year-old woman selling kanji (porridge) and snacks inside the area says that her clientele has dropped to a third over the last five years. “I had thought of using my earnings to help my grandson enrol for engineering, but that does not seem possible,” she says.
Job losses in small units seem to have shaken Tamil Nadu’s small and medium units. Says CK Mohan, General Secretary, Tanstia (Tamil Nadu Small and Tiny Industries Association): “GST hit small players real bad. The procedures to follow are the same as that for a large corporate, which has the wherewithal to hire CAs.” His point is underscored by KV Kanakambaram, President of the Industrial Estate Manufacturers Association in Guindy and the National Confederation of Small Industry. “We have shrunk in size and scale in the past five years,” he says. His office in Guindy’s RV Towers has many distaught visitors. “I have been fighting with bank officers for years now to keep my units going,” says MV Madhu Sudhana, who runs Cosy Industries, a small unit in the Guindy Industrial Estate.
Entrepreneurs say that a cocktail of GST, demonetisation and stringent bank norms has hurt jobs in MSMEs. Says Madhu Sudhana: “Earlier, a field officer would visit factories that have failed to pay back their loans and assess the situation. But now in the automated system, even if there is a delay of one day or a week in payment, the loan becomes an NPA and the unit is paralysed and eventually will be folded up. We don’t need machines or computers to judge us, but humans,” he says.
“Even the State government’s own estimates show that close to 50,000 micro, small and medium enterprises (MSMEs) have shut shop in Tamil Nadu last year alone,” Kanakambaram tells BusinessLine .
The impact of the shocks of the last two years is visible even in the Capital. In Mayapuri, an industrial area in west Delhi, that has over 1,000 units and provides employment to an estimated five lakh people, one finds only a rare notice on the factory gate seeking workers. “Walk-in hirings have declined,” says Neeraj Sehgal, who runs a unit that makes bullet-proof doors that are in much demand with politicians. Sehgal, who however said he was hiring from institutions such as ITIs to keep down costs of training new recruits, is also the general secretary of Mayapuri Industrial Welfare Association as well as Joint Secretary of the Delhi unit of Laghu Udyog Bharati.
It is another matter that this situation co-exists with one of a quixotic shortage of certain types of workers, such as welders, helpers and fitters — a point made by both Sehgal and M Reddy, President, Peenya Industries Association, Bengaluru.
The flatted factories of Okhla, about 25 km apart from Mayapuri, produce a specific part or a component for a larger product or machinery such as public-address systems and submersible pumps. The skills required for those operations are basic — something that can be learnt almost in a day. Finding workers for the shop-floor is not difficult, but employment level in those units has stagnated. Getting people such as accountants, computer operators and office assistants is not so easy, says Charanjeet Singh, CEO of Inter-Tech, a unit that makes electrical products. “Those who join leave with a year — mostly because we cannot provide an ambience that they would want to work in,” adds Singh.
Mohan Gurnani, Chairman, Chamber of Associations of Maharashtra Industry and Trade, explains that, faced with liquidity problems, many businesses had to scale down their operations or even shut down.
A Delhi-based industrialist observes: “MGNREGA should have encouraged people to stay back in the rural areas but with government delaying payments, flow of labour to industrial areas has grown. That’s one reason that industry does not complain of labour shortages, particularly of the unskilled workers.”
Be that as it may, those who have made ‘jobs’ the staple of political debate and chosen to slam the Centre for job losses should note that the situation is too complex to submit itself to easy generalisations. The situation rather is one of old industries wilting away and new enterprises coming up in their wake. Their net impact on jobs is rather hard to ascertain. That’s because no one in the government or private sector reliably collects employment data.
KR Shyam Sundar, Professor, XLRI, Jamshedpur, says: “Anganwadi, construction and e-commerce are emerging areas. The issue is not jobs being created but the terms and conditions of work.” Gurnani, however, feels that industrial jobs lost are more than those created by e-commerce.
Hence, a visible change in Delhi’s industrial zones is the emergence of non-manufacturing businesses. Factories have given way to swanky showrooms for automobile companies and fancy banquet halls, particularly along major roads. Inside the industrial zones, some factories have been replaced with workshops of automobile companies. Manufacturing is gradually ceding ground to service industry in the Capital. “There are some 90 booming sectors for employment in the country,” says Gayathri Vasudevan, CEO of Bengaluru-based LabourNet Services India Ltd, an organisation focused on enabling sustainable livelihood. Among them are what she describes as service technical jobs, which is different from the pure services jobs.
Such jobs include repair and refurbishment services, decorative painting, beauty services, tailoring, and are all consumption-led or due to changes in lifestyles and rising aspirations. Higher ownership of automobiles and growing mechanisation of farms are creating demand for people who can repair vehicles, machinery and equipment. Other sectors that are booming and are therefore creating jobs include food business and hospitality, rise in leisure and holiday travel.
For Bengaluru-based Munniappa, in his late 20s, who finished his graduation in Commerce, getting a job was becoming very difficult. “I did not pursue any specialisation and did not score high marks. But since I knew to ride a two-wheeler I found a job with Swiggy.”
In Delhi, the introduction of e-rickshaws and their proliferation have given rise to many new entrepreneurs — an e-rickshaw costs ₹80,000-1 lakh. The running costs are low — ₹150 for charging the battery commercially is the only recurring cost. Several men have left their factory or small-time jobs to buy and drive e-rickshaw. Some have bought and given it out on rent to a driver.
Most banquet halls are busy for about 90 days — mostly the wedding seasons. People who work as cleaners and peons in factories often take work in the evenings at these banquet halls as cleaners and servers.
Infrastructure creation, proliferation of mobile phones, satellite television, air-conditioners and water filters have spawned a range of jobs. Many of these jobs would be in the informal sector as large companies tend to use small contractors for work such as installation. A lot of after-sales service is done by technicians who are part of the informal sector, instead of authorised service centres. There is no current data on the number of such informal workers. The last such estimate came from the 2011-12 survey of the NSSO and the economy has seen significant changes since then.
Amidst this uncertain working environment, a job in the formal sector remains the ultimate dream. The impact of GST on formalisation of business units has translated into larger EPFO enrolments, but a larger eco-system change will take time to set in. Hence, it does not come as a surprise that over 28 million people applied for 90,000 vacancies that the Indian Railways advertised for (in March).
Gurnani says that while a pick-up in businesses is not very visible, he is optimistic that the situation will improve in the next few months, as he expects the government to announce more measures to help growth.
With inputs from Jinoy Jose P, Venkatesh Ganesh and A Srinivas