The growth in employment in the corporate sector slowed to 1.5 per cent in FY24 from 5.7 per cent in FY23, as merely 90,840 new people gained employment, compared to 333,000 people gaining employment in FY23, a report released by Bank of Baroda on Wednesday showed.
“The employment growth scene in India Inc was quite lacklustre when looked at the aggregate level. Higher growth in FY23, due to the base effect, can only partly explain this low growth,” the report noted.
The report noted that the reason for this slowdown is that FY23 was the first year post-pandemic when there was a certain degree of voluntary and involuntary displacement of staff, leading to higher employment growth in FY23 as activity ramped up.
“The same necessity was not felt in FY24, resulting in a lower growth rate,” it noted.
Sectorally, the report noted that retailing (19.4 per cent) and trading (16.2 per cent) were at the forefront in terms of creating jobs, followed by infrastructure (15.8 per cent), realty (13.6 per cent), and iron and steel (12.1 per cent).
Meanwhile, a few sectors like hospitality (-11.9 per cent), logistics (-11.8 per cent), business services (-6.3 per cent), and textiles (-5 per cent), among others, saw a decline in headcount during the year.
To address the question of whether or not there is a relation between the job creation rate and sales in the year, the report juxtaposed the two and found no clear relationship between growth in employment and sales during FY24.
Trading witnessed growth in employment even while sales declined. The same holds true for plastic products to an extent. For hospitality, business services, and electricals, where employment declined, there was growth in sales.
“Therefore, future prospects may not necessarily be linked to growth in sales and would vary across industries as well as individual companies,” the report noted.
The report obtained employment numbers from a sample of 1,196 companies, with cumulative net sales worth Rs 99.3 trillion in FY24. Since information on employment is provided only in the annual reports of companies, the sample used here is based on availability. This sample, however, includes only large to medium companies and excludes micro and small enterprises.
“A limitation to using these numbers is that the quantum of outsourcing is missed, as companies report only permanent staff on their rolls. Several industries use ‘outsourced staff’ for functions like sales, where remuneration is performance-based,” the report noted.
First Published: Aug 21 2024 | 5:07 PM IS