Textile to capital goods, banking to I-T, start-ups to energy, the economy’s downward spiral is leaving a trail of job losses across both old and new economy sectors. In the near absence of consolidated employment numbers, disaggregated data collated from across these sectors by The Indian Express points to spreading employment distress in a market where fresh hiring opportunities are increasingly limited.
* In the textiles sector, in the last three financial years, 67 units are reported to have closed down across the country, impacting over 17,600 workers — this is as per official Union Textile Ministry data restricted to just the organised segment of the cotton and man-made fibre textile mills. This excludes the small scale industries (SSI) section of the textile value chain where shutdowns and job losses are reported to be far higher.
* Capital goods major major Larsen & Toubro (L&T) laid off about 14,000 employees across businesses during the first two quarters of the fiscal ended March 31, 2017, terming it a “strategic decision.”
* During the first quarter of this fiscal, three of the five biggest IT companies that together employed 878,913 people at the end of the June quarter, saw their workforce shrink by over 1800 people. TCS saw its workforce decline by 1,414 people, Infosys Ltd saw a net decline of 1,811 while Tech Mahindra Ltd, reported that its workforce shrunk by 1,713 people. The numbers would have been worse but for Wipro Ltd and HCL Technologies Ltd which reported net additions to their workforce.
* HDFC Bank’s total employee headcount came down by 6,096 during the January-March 2017 period – from 90,421 to 84,325. In the preceding October-December 2016 quarter, the headcount was down by 4,581. Other private sector banks are also reported to be cutting down on staff strength.
* Job losses have hit the renewable energy sector, one of the big thrust areas of the government. Wind gear supplier Suzlon Energy Ltd and turbine maker ReGen Powertech are learnt to have retrenched well over 1,500 employees over the last six months, while equipment maker Inox Wind Ltd has not paid salaries to sections of its staff over the last two months.
* A total of 212 start-ups shut shop in 2016, 50 per cent higher than in the previous year, according to data analytics firm Tracxn. The big casualties in 2016 included PepperTap and TinyOwl. This year has seen more shutdowns, including ventures such as Stayzilla and Taskbob.
This job distress comes when three of the key drivers of the economy — private investment, private consumption and exports — are not firing, with largely government spend driving growth.
The textiles and apparel sector, where exports account for about 40 per cent of production, is down due to a combination of external factors and the impact of subdued domestic demand, alongside structural issues such as lack of economies of scale, labour woes and high overheads including electricity.
Demonetisation and the transition to GST has hit smaller players hard. The number of workers affected due to closure of cotton and man-made fibre textile units (the bigger units that comprise the non-SSI segment of the industry) during 2016-17 were 4,356 on account of the closure of 18 units, according to official Textile Ministry data on non-SSI units.
During the previous two years, the numbers were 7,938 workers affected by the closure of 27 units in 2015-16 and 5,384 workers affected from the closure of 21 units in 2014-15, taking the cumulative figure to over 17,600 workers impacted by the closure of 67 units in the last three years.
“Most of these (shut units) are in the powerloom sector. The non-SSI unit shutdown figures for the past three years is broadly in line with some of the previous years,” a senior Ministry official said. Details of closure of textile units in the decentralized sectors — powerloom etc — are not compiled and therefore were not available, he said.
Another official said the Textile Ministry has been implementing the Textile Workers Rehabilitation Fund Scheme (TWRFS) and under this, interim relief is provided to textile workers rendered unemployed because of closure of private non-SSI mills. “It has been decided to merge this scheme with Rajiv Gandhi Shramik Kalyan Yojana with effect from April 1, 2017”.
What is disconcerting is the level of distress in the small and medium scale segment of the textile and garments industry which official government data does not capture.
On exports, India’s flat garment export performance in its single biggest market — the US — has not helped matters. India’s apparel exports to the US from January-July 2017 were up just 0.21 per cent at $2.33 billion as against an over 6 per cent jump reported by Vietnam which exported garments worth nearly three times India’s exports at $6.52 billion during the period.
The GST rollout has further hit SME players in textile hubs such as Surat, Bhiwadi and Ichalkaranji. According to Tarachand Kasat, president of the GST Sangharsh Samiti in Surat, units in the filament yarn and man-made fibre product business in Surat are losing around Rs 1.25 crore a day since the July GST rollout.
Capital goods firms are struggling as most of the downstream sectors are saddled with excess capacity and low demand.
L&T’s chief financial officer R Shankar Raman said that the company had taken a strategic decision to resize a business that was not doing well. “If there is time to get the business back to normality, it is important to reduce under-recoveries. So the jobs that we are finding redundant, we are allowing people to move on,” Raman said. Most of the layoffs were reportedly in the company’s financial services business and the minerals and metals segment even though the company did not offer an official comment on the segments where people were let go.
HDFC Bank signalled that falling staff strength may continue as greater efficiencies set in. “This is really a function of…what is happening on the digital side. We do believe that with increased digitisation, certain lines of transaction like counters, etc. actually reduce,” deputy managing director Paresh Sukthankar said in Mumbai on April 21.
The worrying aspect, though, is on two counts: sectors such as financial services and IT/BPO, which have led the limited buoyancy in the labour bureau’s quarterly establishment surveys, are laying off people on a mass scale and new economy sectors that are the thrust areas of the NDA Government, including renewable energy and start-ups, are also facing a downward slide.
On the IT sector lay-offs, industry lobby group National Association of Software and Services Companies (NASSCOM) said there is no information on number of tech sector workers who have lost their jobs but said the IT-ITeS industry is estimated to directly employ nearly 39 lakh people, an addition of around 175,000 people over the year FY 2016-17.
The renewable sector is seeing a wave of lay-offs. Asked about its layoffs, Suzlon did not offer a formal response but a company executive said that “a manpower cost optimisation” exercise is on. ReGen Powertech, which retrenched at least 300 people from a factory it closed down in Rajasthan, is reportedly still in the process of laying off staff across units, sources said.
ReGen’s official response to queries sent by The Indian Express played down the layoffs. “We have laid off nearly 200 people in the company… The initiative of optimising the overheads has been taken by almost all wind-turbine manufacturers including Regen Powertech,” said Madhusudan Khemka, managing director Regen Powertech, in response to a query by The Indian Express.
Noida-based Inox Wind, which has not paid salaries to most employees over the last two months, did not respond to emails seeking comment. Inox Wind manufactures nacelles and hubs at a plant located in Una in Himachal Pradesh and rotor blades at facilities and tower plants in Gujarat and Madhya Pradesh.
LAYOFFS AND SHUTDOWNS
* 67 textile units shut down between FY’15 and FY’17, impacting over 17,600 staff
* L&T laid off 14,000 staff in first 2 quarters FY’17. HDFC Bank’s net jobs losses for FY’17: 3,230
* During Q1 of FY’18, TCS workforce down by 1,414; Infosys by 1,811; Tech Mahindra by 1,713
* Suzlon Energy Ltd, ReGen retrenched 1,500 over last 6 months
* 212 startups wind up operations in 2016