Despite the Indian government’s efforts to rely on the private sector to push forward initiatives focused on employment and skill development, a recent report has highlighted a slowdown in hiring within India’s corporate sector during the last fiscal year, despite overall economic growth.
According to a study by Bank of Baroda, which surveyed 1,196 companies, employment growth in India Inc. was a mere 1.5% in FY24, compared to 5.7% in the previous fiscal year. The increase in the total workforce across these companies was just 90,840, bringing the total number of employees to 6.25 million. In contrast, FY23 saw a significant jump of around 333,000 employees, raising the total to 6.16 million.
The report noted that the employment growth in FY24 was relatively modest when observed at the aggregate level, with the increase in hiring not strongly linked to sales growth. It suggested that hiring decisions were more influenced by industry-specific trends rather than broader economic performance.
Certain sectors, such as retail, trading, infrastructure, real estate, iron and steel, and finance, were identified as major drivers of job growth, with some witnessing double-digit increases in hiring. These sectors, particularly those in services and infrastructure like steel and construction, saw the highest employment growth. Government-led efforts to boost housing demand also contributed to increased hiring in the real estate sector. Similarly, retail and trading sectors, as well as non-banking financial companies (NBFCs), were notable for their strong hiring trends.
Other sectors such as telecom, plastic products, banks, and fast-moving consumer goods (FMCG) showed moderate hiring growth ranging from 4% to 10%. On the other hand, some industries experienced minimal or stagnant employment growth, including media, entertainment, insurance, consumer durables, chemicals, crude oil, and construction materials.
The report also identified sectors that experienced a decline in their workforce, such as IT, textiles, power, electricals, hospitality, and business services. These sectors were deemed “job destroyers,” with layoffs possibly driven by various business reasons.
A key factor contributing to the overall slowdown in hiring growth was the post-pandemic recovery phase observed in FY23, which saw a rebound in employment as companies ramped up operations following the disruptions caused by the pandemic. However, this surge was not sustained into FY24, as companies did not face the same urgency to increase headcount, leading to a slower pace of employment growth.
In conclusion, while certain sectors continued to drive job creation, others faced challenges that resulted in either stagnation or downsizing. The slowdown in hiring reflects broader trends in the economy and the shifting dynamics of the job market post-pandemic.
