Job and salary cuts leave young Indians in the lurch: revival in June unlikely to last

Atulya Bagrabond is son of a farmer in north Karnataka. Till last February, he worked at a BPO operations centre in Mangalore, earning Rs 24,000 a month when the entrepreneurship bug bit him.

A passionate dog-lover, Atulya had always dreamt of running a kennel and a dog breeding centre. Over the last two years, he had even saved nearly a lakh of Rupees. He had got around eight pups in February this year and made two sales by March end when the lockdown was announced.

“I cannot tell you how it was. I can just say that getting a dog was not on anyone’s mind. I blew up all my savings and had to ask my father for some money. After June 1, I asked a former colleague to drive us to our village. Since then, I am here. Before leaving, two of my former colleagues bought one dog each. Now, I am back at my parents’ home with four dogs,” he says.

He has been trying to get a job in a BPO for the last three months but to no avail. “There are just no jobs. I got one offer. It was in Bangalore and they offered Rs 18,000. You can’t live on that in Bangalore. A lot of my former colleagues got laid off, many had 30 per cent pay cuts,” he sounded resigned.

Lifting lockdown and a robust sowing season brought about an improvement in June, when unemployment rate slumped compared to May. But experts still sound pessimistic.

Veteran economist Arun Kumar says, “Exports, investment and consumption, all three engines of growth are into a tailspin. Unless the government wakes up to the reality that without aggregate investment there would be no change in demand, output and employment, the situation is likely to get worse. This spurt in employment in June is transitory and is unlikely to be sustained once the sowing season gets over.”

According to the IHS Markit India Business Outlook survey, business sentiment in India turned negative for the first time in more than a decade, reflecting pessimism on part of Indian businesses.

“The business activity net balance fell sharply to -30% in June, from +26% in February, according to IHS Markit India Business Outlook survey results…This was the lowest reading on record and the first time that a negative outlook has been signaled since the series began in late-2009, IHS said,” said a Bloomberg report.

“The outlook for India was the worst globally,” said Andrew Harker, economics director at IHS Markit, rubbing salt into the wound while referring to confidence level among all countries monitored by IHS. “There appears to be little light at the end of the tunnel at present,” he added.

According to jobs portal Naukri. com, hiring across Indian cities slumped by more than 50% in May this year compared to the same month in 2019. Recruitments in hotels, restaurants, travel and airlines industries slumped by as much as 91%. Most number of people working in sectors like retail, hospitality and tourism, worst hit by the pandemic, are young, according to an Atlantic Council think tank report.

The International Labour Organization (ILO) had warned in May that the pandemic could "leave many young people behind", permanently excluding them from the job market. The virus's legacy could be with us "for decades", it said.

The ILO estimate that more than one in six young people across the world have lost their jobs since the pandemic began. In India, owing to our much-touted demographic dividend, the proportion of young workers is higher. As are those affected by the crisis.

IT companies in India, too, have resorted to layoffs, though they have been mostly linked to non-performance. Some have been sacked due to lack of projects. “However, the underlining reason that has triggered a fresh wave of IT layoffs, especially in IBM and Cognizant, seems to be related to downsizing workforce in an uncertain business environment,” said Prabhat Dwivedi who runs an IT and ITES manpower firm in Pune.

A Tata Group source said that the behemoth was planning reduction in workforce in its automobile, aviation, aerospace and retail divisions.

The Mukesh Ambani-led Reliance Industries had announced pay cuts of up to 50% for some top oil-and-gas division employees on April 30 itself. Employees earning more than Rs 15 lakh a year faced a 10% cut while senior executives took 30% to 50% salary cuts.

Other companies which carried out retrenchments in India included cab aggregators Ola and Uber, food delivery majors Swiggy and Zomato, and international workspace sharing firm WeWork.There was a bloodbath in Indian media with lay-offs, furloughs and pay cuts reported from numerous entities, including but not limited to NDTV, The Hindu, The Times Of India, Hindustan Times, The Telegraph, Indian Express and Business Standard.

According to an online survey conducted by The Economic Times on the impact of COVID-19, as many as 39% of the 3,074 respondents said they took a salary cut, while 15% said they lost their jobs. The impact of these lay-offs and salary cuts will be felt by an economy which is already reeling under acute demand depression. Now, demand will further squeeze as the households affected will only consume the bare minimum.

The Government of India is not being of much help. After salary cuts were announced for staff at AirIndia, India's largest employer, Indian Railways, has now decided not to fill any new posts across the country. Last November, Railway Minister Piyush Goyal had announced that the Railways had started the process to fill around 2.93 lakh posts.

But as part of their action plan for rationalisation of expenditure following the lockdown, the Railway Board has now ordered the zonal railways and production units to freeze the creation of new posts except in the safety category until further orders. The apex body of the railways also ordered zonal railways to review the posts created in the last two years, and if recruitment has not been completed for those posts, ordered that the same be surrendered.

In addition, 50 per cent of existing vacancies in non-safety categories including mechanical, electrical and signal and telecommunication departments also have to be surrendered, added the Railway board.

“Many crucial posts which were filled with retired staff in the last few months have become vacant after many were relieved from their posts during the lockdown. The railways should try to fill vacancies at the earliest,” said an office-bearer of the employees’ union.

An employee of the Airports Authority of India, associated with the Confederation of Central Government Employees’ Association, claimed central government employees too might have to face salary cuts.

“We know top level meetings have been held where a proposal has been mooted to dock central government employee pay by 35 per cent for the time being. The government says it does not have any money and that the docked amount will be paid as arrears as and when the situation improves. We have started discussing with our counterparts in SAIL, GAIL, LIC, OIL, ONGC, NTPC and other government PSUs as to the course of action in case the government goes through this plan.”

At a time when the government must radically increase government expenditure in employment generating schemes, it seems the Narendra Modi government is taking every wrong measure possible. When monetisation of the economy is the need of the hour, it seems more bothered about credit ratings.

The price is being paid by the Indian workforce and the price is getting higher with every passing day.