Good morning. The past year has thrown up a volley of dire news about the job market across the globe, and also in India. Big tech companies having massive layoffs, hiring in the information technology (IT) sector slowing down and even foreign degrees losing their sheen in the Indian job market. While the government has come up with incentives, they’re just not enough. Read on to know more. 

In other news, there was a slowdown in the growth of India’s fast-moving consumer goods industry in the June quarter. Meanwhile, a new survey finds workplaces still have deep biases against women. 

THE TAKE

India Can’t Solve Its Job Crisis With Generalised Measures

To its credit, the government is throwing everything it has at the jobs problem obviously hoping that something will stick. For starters, the Union Budget allocated Rs 1.48 lakh crore or around $17 billion to education, employment and skilling. 

The government plans to provide a month’s salary to youngsters joining the formal workforce with a cap of course. It also wants to reimburse employers up to Rs 3,000 a month for two years for each additional employee hired and those who come on the formal rolls. This will be measured by their joining the Employees Provident Fund Organisation.

The specific numbers don’t matter because they are all in millions, suffice to say that the government wants to incentivise employers and employees and also boost an internship programme.

In the case of internships, the focus is on spending a year working in a job environment rather than classroom instruction. 

The scheme offers a monthly internship allowance of INR 5,000. Over 12 months, this totals INR 60,000, plus an additional INR 6,000 for incidentals. 

The government will cover Rs 54,000 of the monthly allowance and Rs 6,000 for incidentals. Organisations will be responsible for Rs 6,000 (10% of the internship allowance) and the training costs, which can be funded through their CSR budgets. CSR funds can also cover reasonable administrative expenses.

The idea of internship programmes is obviously that people will or should get hired or be in a better position to get hired after that.

Now, let me come to Reliance Industries because it's the largest company by sales in the private sector. While it employs less than information technology (IT) giant Tata Consultancy Services which employs around 6,00,000 people, Reliance’s staff strength is closer to Infosys which is around 3,15,000.

This is where it gets interesting.

Churn At Reliance

Reliance employed around 3,89,000 staff in the 2022-23 year, a number which dropped more than 10% to 3,47,362 in the 2023-24 year or last financial year.  

Reliance Retail employs around 2,07,000 people,  but that number stood at 2,45,000 the year before. The interesting thing is it's not that Reliance is not hiring, but it let go of some 1,43,000 people and hired 171,000 people in the same year. Reliance says that the highest churn of employees is in its retail business, especially store operations. So it would appear that almost half of Reliance’s employees were hired in the last year. Remember, the current total is around 3,48,000.

It is true that in retail, as in banking, attrition levels are high at the front end, particularly in private banks where attrition levels can range between 34 to 40%. This means almost a third of the organisation is turning over, though again, at front-end roles.

For companies battling such high attrition levels, growth itself becomes a challenge. I can imagine every CEO or HR head pulling their hair out to find technology or other solutions that help them grow without having to deal with such massive attrition.  

Job Market Fragility

Except for some exceptions, there is considerable fragility in the job market. This fragility also means that the job market will not grow as we desire even if companies themselves expand and add capacity. These are the aspirational private sector jobs that one is talking about. 

The unorganised sector, which is more than 90% of the job market, will also grow but not all those jobs will be aspirational.

Now, IT services are a major employer in the organised sector. As we have seen, almost all major IT services companies have been shrinking. It's not that they are not hiring but they are letting go more people than they are hiring. 

Other segments of the IT services space, such as the captive global capability centres or GCCs of large multinationals are hiring and growing. However, industry voices say that hiring among global capability centres is not offsetting the losses in IT services. Also, skill levels will differ so it is a nuanced discussion.

The massive attrition and churn in some industries also suggests the problem with talent and fitment, be it Reliance Industries or Infosys.

The overall numbers suggest that despite government incentives, a major employment spike seems unlikely. The overall linear growth figure may not shift. It may shrink in some industries and grow in others.

While businesses will expand and grow as the economy does and new manufacturing and services opportunities come up, there is nothing to suggest that we can solve our job crisis with generalised solutions. 

We need more fresh ideas on the most ideal ingredients for sustainable new job-creating enterprises but we also need a patient approach, both in policy as well in practice.

I use the word sustainable with some care because tens of thousands of jobs created by casino-grade venture capital in the last decade have gone because they were never sustainable in the first place.

And no one wants to stay a delivery person for life.

For more on this or pick up on the top news of the day and conversations with experts, click here. 

CO:Relation

Dabur’s Rural Boost Isn’t All Good News

Dabur, the maker of Chawanprash and other consumer products, is pinning its hopes on the rural recovery. The company provided insights into the extent of the rural recovery. Over the past three quarters, volume growth in sales has grown steadily, and more importantly, that continued in July 2024. The company told analysts that the rural consumer is coming back. The better sentiment, the management said, was due to a good harvest, normal monsoon season, and government infrastructure push. The company saw the sub-stockists channel doing well and money returning with higher credit terms. There was also a decline in inventory, which piled up due to the slowdown. 

There are, however, red flags. Dabur is unable to push any significant price increases. While input costs have grown, the company’s ability to pass them on to the consumer remains challenging. The other key factor is that Dabur claims that the overall FMCG market is declining despite the recovery of rural markets. The stock market reaction to the recovery of rural consumption is timid. Dabur shares have underperformed peers over the past month despite doing better in 2024.

CORE NUMBER

Rs 6 lakh 91 hundred crores

This is the collective net worth of India's most valuable family businesses according to the '2024 Barclays Private Clients Hurun India Most Valuable Family Businesses' report. The top three families in this list Ambani, Bajaj and Birla have a combined net worth of a whopping $460 billion, higher than Singapore’s GDP. This highlights the glaring income inequality in the country where the bottom 50% of the population earns just 15% of the national income, as per a study by the World Inequality Lab. 

FROM THE PERIPHERY

—😓 FMCG companies had a lacklustre June quarter this year as volumes grew by just 3.8% year-on-year compared to 7.5% in the same quarter last year, according to data by NielsenIQ. The previous quarter too had registered a higher volume growth at 6.6%.  This quarter's price growth was just 0.2% while last year it stood at 4.4% in the same period. This slowdown in volumes has been attributed to slower consumption growth, while value growth has been muted due to moderate price hikes compared to last year. Between urban and rural, the latter registered stronger volume growth at 5.2% while urban grew by just 2.8%. 

—🚺 Looks like even in 2024, the workplace isn’t very welcoming for women. A recent survey of 24,000 professional women by professional services firm Aon revealed that several factors like post-maternity setbacks, bias and mental exhaustion hold women back in the workplace. One in 3 women surveyed experienced microaggressions at work, including bias and judgement, while 75% of the respondents said that taking a maternity leave led to a career setback of 1-2 years. Among the respondents, 40%  said that going on maternity leave had a negative impact on their pay. 

—📱 To ease tax payments by consumers through UPI, the Reserve Bank of India (RBI) has increased the transaction limit for tax payments from Rs 1 lakh to Rs 5 lakh. Along with this, the RBI has also introduced a ‘Delegated Payments’ facility, which allows a user to authorise another person to make UPI transactions from their bank account. This would allow two family members to use the same bank account to make payments through UPI. Both moves are aimed at furthering the usage of digital payments in the country. 

—🏭 India's logistics and industrial sector surged in H1 2024. Rents for new or recently refurbished spaces (Grade A) and older buildings(Grade B) soared due to high demand for warehousing and light manufacturing leases. The third-party logistics sector led demand at 38%, followed by auto and engineering at 23%, and FMCG, FMCD, and retail at 20%. Cities like Mumbai, Delhi NCR, Bengaluru, Kolkata, Chennai and Pune saw rent increase by 4.8% in Grade A and 6.4% in Grade B. 

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