CARE Ratings in its latest study report has showed that the pace of Employment growth in India has slowed down in the past two years, to 3.9 percent in 2017-18 and 2.8 percent in 2018-19 as the core industries have observed virtually, negative growth in hiring. It noted that growth in employment was 2.5 percent in 2015-16, 4.1 percent in 2016-17. Therefore, it said that employment growth has slowed down in the past two years after a sharp recovery in 2016-17.
Ideally, the study observed that the rate of growth in employment must link with growth in the gross domestic product (GDP), which is the broadest indicator of economic activity. However, it said employment growth has not been commensurate with GDP growth with a difference of 4.2 percent in CAGR during this period. Besides, it pointed out that the top 10 sectors covering 895 companies with the employment of 4.70 million in 2018-19 accounted for three fourth of the total employment of the sample companies. Of this 42.4 percent of employment, it said the share was from three service industries while the balance was from manufacturing (30 percent) and agriculture (3 percent).
According to the report, overall the share of employment in services is around 50 percent. Sector-wise, it revealed that the core industries have witnessed virtually negative growth in headcount, with crude oil just about maintaining the employment level. It also said these industries have been impacted by the slowdown in GDP growth as well as the challenges on the NPA side for banks. It added that a similar picture is witnessed for the heavy industries where growth has tended to be negative for power and capital goods and just 0.4 percent for infra.
However, the agency stated that the consumer-oriented industries showed a varied pattern, like in the 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 percent. The manufacturing had witnessed fairly good growth in employment with 5 of the 8 industries registering higher than sample growth in employment. Two sectors have witnessed negative growth, which is paper and gems and jewelry, while chemicals recorded growth of just 1.6 percent. Healthcare and automobiles have registered a healthy growth of 4.8 percent in employment, which is quite impressive.
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