“When the going gets tough, the tough get going” … try telling that to those who lost their jobs in 2019 in India.
It’s been a tough year where everyone with a job faced severe pressure to meet targets in a slowing economy, surviving one nerve-wracking week to the next, not knowing whether the axe would fall on their neck. That’s the way 2019 has been for most.
Some of the worst-hit sectors include auto, IT, telecom, manufacturing, aviation, among others. Take a look at the lives affected in these sectors.
Ride-Hailing
Ola, the ride-hailing company, is restructuring its business to optimise operations and bring down losses. The company has axed 500 jobs and plans to extend the number to 1,000 by mid-year.
IT Sector
Cognizant shook the IT industry when it announced axing 13,000 jobs, a large percentage of which was deployed to service one of its biggest client – Facebook.
Infosys has plans to lay off 2,200 mid-to-senior level staff in the JL6 band that makes around 10 per cent of the workforce. The company plans to let go of over 10,000 executives in the JL3, 4 and 5 bands.
French IT firm Capgemini has laid off 500 of its 1.08 lakh staff in India.
However, many of the companies releasing staff are continuing to hire new staff and also reskill existing staff to keep up with the emerging demand.
Real Estate
The real estate sector is the biggest creator of non-manufacturing jobs, and any increase or decrease in employment in this sector offers an accurate indicator of the direction in which the economy is heading.
The severe cash crunch in the construction business has resulted in many banks reporting high Non Performing Assets (NPA). It resulted in banks tightening the squeeze on lending, which in turn has resulted in projects coming to a standstill with no solution in sight.
It’s the workers employed directly and indirectly in the construction business who have suffered the worst. Job loss without any social security cover means every family is struggling to survive. As per a paper published by the Centre for Sustainable Employment, Azim Premji University, 9 million jobs were lost between 2011-12 and 2017-18, the highest since India’s independence.
The economic and social impact of this is seen in the overall slowdown in the economy, as consumption and expenditure have fallen.
Manufacturing
Across industries, manufacturing firms were forced to cut back production and reduce labour workforce to minimise losses. Core industries reported a fall in output from 5.5 per cent in April-November 2018 to 1.3 per cent, resulting in significant layoffs.
Factories that operated on three shifts are down to operating a single shift. Same for those running two shifts. Single shift operators reduced the number of working days. Those who have lost jobs have no other options to make ends meet. No money means no spending and that in turn, is slowing the economy.
The Indian Cellular and Electronics Association (ICEA) pegs the total number of job losses in handset manufacturing and retailing at 250,000 in the last two years. Indian handset manufacturers including Micromax and Intex have reported 20,000-25,000 job cuts.
Auto
Another sign of a slowdown in the economy is the offtake levels of two and four-wheeler vehicles. Consumers have stopped buying cars; businesses have stopped buying light and heavy commercial vehicles.
It is evident from the December 2019 press release by the Society of Indian Automobile Manufacturers (SIAM) reporting a fall in production of all vehicle segments by 13.75 per cent in the period April-November 2019 when compared to the same period in 2018. From April to August 2019, over 350,000 workers are reported to have lost their jobs, as per media reports.
The result, 300 auto dealerships have shut and over one million jobs lost in the auto manufacturing and component manufacturing industries.
India’s leading car manufacturer Maruti Suzuki India has been cutting production as sales continue to fall. Over 3,000 temporary staff were released. Production cutbacks and layoffs were seen across companies like M&M, Tata Motors, among others.
Two-wheeler major Hero MotoCorp offered a Voluntary Retirement Scheme (VRS) to workers above 40 years and who have completed five years with the company. Tata Motors has resorted to VRS as well.
Aviation
Jet Airways shutting down was the worst news for the aviation sector in India. Overnight, the well-trained workforce of 16,000 found themselves on the roads. Companies like Indigo and Spicejet absorbed a few, but most remain unemployed since the industry is facing headwinds.
Air India is another bad case in the making. The government has been attempting to sell off the airline, but the first round found no takers. The second round is expected to generate some serious interest, but job losses are inevitable.
Telecom
Telecom is an industry relatively insulated from global headwinds but impacted by consolidation and the disruptive arrival of Reliance Jio. The industry was growing at a fair pace until we saw consolidation bring down the number of telecom players in India to three – Vodafone, Idea, Airtel and Reliance Jio (of this Vodafone India and Idea Cellular have merged).
From 2018 onwards, Reliance Jio has significantly raised the number of subscribers, while Vodafone Idea has witnessed the maximum loss followed by Airtel.
Competition from private players in telecom hit the public sector major BSNL resulting in losses of over Rs 90,000 crore. To bring down losses, BSNL reduced its 1.50 lakh workforce by offering VRS to over 57,000 employees. The company plans to raise the number of VRS to 77,000 this year. Its merger with another loss-making company, MTNL, will result in job losses in the latter.
Banking
The year 2019 began with Axis Bank getting a new CEO, and he initiated cost-cutting immediately. By April, 50 managers had lost their jobs, and by the end of 2019, over 15,000 had resigned. However, Axis Bank has recruited 28,000 new staff as part of its restructuring exercise. It is still a pain for those who lost a steady job. HSBC retrenched 150 of its staff.
E-commerce
Gurugram-based ShopClues axed around 200 employees in July 2019.
Pharmaceutical
Sun Pharma is reported to have shut two of its plants in August 2019. As a result, 85 employees lost their jobs.
Hospitality
Budget hotel booking site Treebo is said to have fired 100-200 employees in July 2019
What to expect in 2020
Expect to witness a continuing slowdown in the creation of new jobs while existing ones will continue to remain under pressure.
Related Link:
