India Inc. experienced a significant slowdown in employment growth in the fiscal year 2024, with only a 1.5 per cent increase compared to a 5.7 per cent rise in the previous year, according to a report by Bank of Baroda. The report noted that only 90,840 jobs were added in FY24, a sharp decline from the 3.33 lakh jobs created in FY23. By March 2024, the total employment across 1,196 companies reached 62,51,808, indicating that businesses are adopting a cautious approach due to evolving economic conditions.
The report classified sectors into ‘job accelerators,’ ‘job creators,’ and ‘job stabilizers,’ with retailing and trading emerging as job accelerators with growth rates of 19.4 per cent and 16.2 per cent, respectively. On the other hand, the IT and textiles sectors were categorized as ‘job destroyers,’ experiencing significant reductions in their workforce due to downsizing and restructuring. Despite a strong economic growth rate of 8.2 per cent in FY24, many companies focused on efficiency rather than expanding their workforce, with the IT sector showing modest sales growth of 5.6 per cent while reducing its workforce.
The report highlighted the challenges faced by different industries, some leading to downsizing while others continue to grow and add jobs. It mentioned, “The ‘job destroyers’ is a significant group where there was fall in headcounts in FY24. IT and textiles are the significant players here which have considerable share in the total headcount in the corporate sector.” The connection between sales growth and employment creation appears murky, indicating that long-term business goals are now more influential in employment decisions than immediate sales figures.
As companies navigate the uncertain market environment, the report emphasized that the focus on technology and efficiency is likely to shape future employment trends. However, the report pointed out that despite higher growth rates in FY23, the base effect can only partly explain the low growth of 1.5 per cent in FY24. The mixed picture across industries highlights the diverse challenges faced by different sectors, with some experiencing downsizing while others continue to expand and add jobs.
In conclusion, the report signifies that overall employment growth in India Inc. remains sluggish, showcasing a cautious approach as businesses respond to the changing market conditions. It suggests that as companies continue to adapt to the evolving economic landscape, the focus on technology and efficiency will play a pivotal role in shaping future employment trends. Despite the challenging environment, there is potential for sectors to bounce back and create more job opportunities as they innovate and adjust to the dynamic market conditions.
