India లో Jobs బాగా Create చెయ్యాలి అంటున్న IMF’s Gita Gopinath

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India needs to lift job growth via reforms: IMF’s Gita Gopinath

IMF economist calls for wide range of reforms to boost employment, bats for women’s safety noting that country can’t become developed without more women in the workforce, and wishes for stronger institutions, including an efficient judiciary

India needs to improve the depth and quality of its education system to create an employable workforce, nurture effective institutions, including an efficient judiciary, to support development, and pursue reforms in its land and labour markets, in order to actualize its quest to become a developed country, International Monetary Fund deputy managing director Gita Gopinath asserted on Saturday (August 17, 2024).

While India’s GDP growth has averaged 6.6% since the 2010s till the pandemic, its employment growth has been under 2% through this period, the IMF official pointed out. “So it is indeed the case… compared to other G20 emerging market economies, growth in India has been much less in terms of employment-driven, [and] much more intensive in terms of capital,” she said.

Between now and 2030, India will have to create anywhere between 60 million to 148 million additional jobs cumulatively over this period, she reckoned, calling for policies that don’t penalize firms for hiring works, and implementing reforms proposed in the Labour Codes cleared a few years ago by Parliament, through incentives for States.

“India is at about an intermediate level of preparedness, somewhat slightly above the average for emerging markets and developing economies. But again, if you look within those indicators, the indicator on education and skilling levels of the workforce, that’s the area where a lot more work is required for it to be able to adapt,” she said.

“If you look at the years of formal education, for example, for the workforce in India compared to its G20 peers, it is on the lower end. The second, of course, is investing in infrastructure that the government has done a lot on… but there is still a big gap between what is needed and where the country is,” the economists noted.

 

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Infosys delays onboarding of nearly 2,000 freshers from 2022 batch

Moneycontrol learns that these software engineers were asked to take two pre-training sessions, with the last one being as recent as August 19.

Software major Infosys has delayed onboarding of nearly 2,000 freshers that it handed over offer letters in 2022, according to people impacted by the move, who spoke to Moneycontrol.

The said roles are for System Engineers and Digital Specialist Engineers. Moneycontrol learns that these software engineers were asked to take two pre-training sessions, with the last one being as recent as August 19.

It is also being alleged that many candidates haven’t yet received the credentials to login to the online portal for the pre-training sessions yet, which were to begin on August 19.

Moneycontrol has reached out to Infosys for a comment, the story will be updated as and when the company responds. In July, the Bengaluru-based company had said that a small portion of the earlier hirings were pending.

Salary of the position of System Engineer was Rs 3.6 lakh per annum while the position Digital of Specialist Engineer fetched Rs 6.5 lakh per annum, according to the people mentioned above.

The country’s second-largest software exporter sent offer letters back in 2022 but did not on-board the candidates after the IT industry faced a slump. This phenomenon, however, is an industry-wide issue. Fears of a looming recession in IT companies' major markets and the absence of discretionary spending led companies to pause hiring, leading to a multi-decadal decline in headcounts.

Infosys had hired over 50,000 freshers in financial year 2022-23 from campuses, which plunged to nearly 11,900 college graduates in FY23-24, CEO and MD Salil Parekh, said in the company’s annual report released on June 3.

“Their onboarding process was supposed to be that our training would take place in Mysore, and still, we trusted them and gave the pre-training exam. We were just expecting the result, but what did they do? Again and again, sending pre-training emails,” one of the above-cited candidate said.

One candidate said he received his pre-training date on July 1, with one Infosys Human Resource official saying the results would be announced within two days for which the joining dates would be by September 2.

The candidate, along with several others, appeared for the exam on July 24. Post which, it is alleged that candidates received another pre-training email stating that this time the exam would be held offline.

“How can we trust that this won't happen again? Now, I need justice as I have wasted 2.5+ years because of Infosys,” the candidate said.

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Why the India growth story needs more white collar jobs

Blue collar jobs are good for sustenance and basic consumption, but it is the white collar workers who end up becoming savers and discretionary spenders

India’s automobile dealers have a problem – a rising mountain of unsold inventory.  The Federation of Automobile Dealers Associations, representing the sales end of the auto value chain, claims that current inventory with dealers is in excess of 7.3 lakh units – over two months sales. So much so that the body has reportedly written twice in less than two months to its manufacturing counterpart, the Society of Indian Automobile Manufacturers, protesting against the dumping of stock on dealers.

Automobiles represent the high end of the consumer durables spectrum, but the picture is little different in the fast moving consumer goods (FMCG) sector. While the sector is still growing – after all, the population is still expanding – the rate of growth has fallen sharply, falling to 4 per cent in the April-June Quarter, compared to over 12 per cent in the year ago period.

Cut to Mumbai University’s sports ground in India’s financial capital. Earlier this month, more than 1.11 lakh women – many of them young mothers with infants – competed with each other in physical tests at the ground, as a prelude to selection for a mere 1,257 jobs as woman constables in Mumbai’s police force. The job paid Rs 30,000 per month, and came with benefits like tenure, some healthcare and potential housing benefits – a most desirable job in India’s desperate employment landscape.

Meanwhile, commercial banks in India are grappling with a different problem. While demand for credit is robust – particularly consumer and retail credit – the growth in their deposit base is not. Banks need the term deposits to fund their lending. But increasingly, savers – particularly younger ones – are shifting away from FDs, with senior citizens now accounting for nearly half (47 per cent) of all bank term deposits.

What is the common thread connecting these seemingly disparate developments?

The answer is jobs. Quality jobs, the so called “white collar” jobs that all virtually every Indian joining the workforce actually wants. Jobs which pay reasonable wages, have defined work conditions and benefits and above all, offer some security of tenure.

The trouble is, India is not creating nowhere near enough white collar jobs. 

The trouble is, when policymakers and industry talk about jobs, they tend to club them all in one amorphous mass. But the vast majority of these jobs are blue and grey collar jobs. According to a recent study by consulting firm McKinsey, blue collar jobs will account for 70 per cent of the 90 million new jobs to be created in the formal economy by 2030.

Without the quarter century boost in white collar employment provided by the IT and ITeS sector for instance, our metros like Bengaluru, Delhi, Gurgaon or Pune wouldn’t be anything like what they are today. Consumption accounts for nearly 60 per cent of the GDP. Of this, high end consumption – on real estate, automobiles and high-end white goods,  air trave and the like – provide the real margins to the companies which provide such goods and services. And those in stable jobs with higher disposable incomes also tend to be bigger savers.

White collar workers make up barely a sixth of the workforce. But higher-end white collar workers – engineers, doctors, accountants and the like – make up barely 5 per cent. This is far too thin a base to build a consumption-led growth story. For that to happen, economic growth needs to translate to more jobs, preferable more of the white collar variety.

 

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Why the India placement story has turned sour

If even IIT Bombay can’t manage to find jobs for all its graduates, news is far worse for 10 million graduating every year. Industries are slowing or restructuring, today’s skills have a shelf life of just about three years

The Indian placement story is out. And it doesn’t make for great reading. Certainly not when it’s been scripted at the hallowed IIT Bombay, which has managed to place just 75% of its students through the campus recruitment process this year. What’s just as striking, the lowest package to be offered went down to Rs 4 lakh, from Rs 6 lakh earlier.

Even as IIT-B saw 543 companies registering for placements, only 388 participated, and 364 made offers. Whatever happened to the others?

Beyond the top tier | This is the scenario at one of India’s premier institutions. It gets worse when one considers the new IITs, NITs, universities and the innumerable other institutions that have mushroomed across the country. That may not be surprising since only about 30% of students at most such institutions are found employable. This is being reflected in statistics on jobs in India.

Unemployment rate rose sharply to 9.2% in June 2024 from 7% in May 2024, according to CMIE’s Consumer Pyramids Household Survey. On the other hand, employment rate fell from 38% in May to 37.6% in June.

India churns out approximately 1.5 million engineers and 8.5 million regular graduates (BA, BCom, BSC, BBA and other degrees) every year, totalling 10 million graduates in all. Are there enough jobs for them? This figure does not include those who do not go to college, numbering 70 to every 100 of those who do. Not a single industry body, be it CII, FICCI or ASSOCHAM, has raised this issue of demand side metrics effectively enough before education planners in India.

But the issue may have more to do with the deficit in job creation that India has been facing. It’s not just that employment opportunities are shrinking. Even the order of skills required at the entry level is rising, thanks to high levels of automation and induction of technology.

Limits of service sector | There are three sectors that generate employment. The primary employment sector, which depends on earth’s produce like food items and minerals, has the potential of creating about 15% jobs. The secondary sector, or manufacturing, can create about 35% jobs. And the tertiary or service sector accounts for the remaining 50%. If the primary and secondary sectors stagnate, the tertiary sector too suffers, though most employment is today being created in the service sector, albeit of low-paying variety.

The industrial sector has seen a slowdown, with employees being regularly laid off and salary cuts being imposed on many who retain their jobs. Declining salaries for fresh graduates must be seen against this backdrop. Behind this are several interconnected factors, such as economic uncertainty and industry trends, technological advancements, market saturation, globalisation and outsourcing, impact of AI and automation, and company-specific challenges.

Mantha is former chairman of AICTE and Thakur is former secretary of education, GoI

 

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The Long Wait: As IT firms delay onboarding, fresh graduates face financial uncertainties

Over the past five-six quarters, the $250-billion technology services industry has struggled to grow because demand is slowing down, leading to delays or pauses in hiring new graduates. The outsourcing industry, which recruited around 2.5 lakh engineering graduates at its peak in 2020 and 2021, has witnessed an unprecedented cumulative headcount fall of over 60,000.

Typically, companies plan their hiring and backfilling carefully due to high turnover rates at the junior level. The uncertainty from the Covid pandemic has increased this challenge.