Joblessness and acute shortage in sales have been digging pits for the worst unemployment scenarios that the country has seen in last 10 years. According to the The Periodic Labour Force Survey (PLFS), it has been found out that the all-India unemployment rate has now touched 6.1%, highest among male workers since 1977-78, and highest among the female since 1983.
It is not just the clothing sector, or the automobile one that is being adversely affected not just by shrinking of sales but also in providing enough jobs hiring. With banks, insurance companies, car-makers and logistics & infrastructure players hiring less and less, India’s jobs scene is looking increasingly gloomy with hiring activity slowing across most sectors.
The Intense Fallout
Surveys have provided with the information that the appraisals in every sector has been low this time, accompanied with sales numbers falling all around. This is not just it. To make matters worse, the private sector salary growth in the country in 2018-19 was the worst in 10 years.
According to PLFS, the number of unemployed individuals stood at 10 million, during the period between 1999-2000 and 2011-12. It touched 10.8 million in 2011-12, while today for 2018-19, this number has climbed up to a double value of 28.5 million unemployed people. Now this is saying something.
Understanding the Reason for Fallout
The survey data provided by CMIE suggests that the unenthusiastic business environment created by multiple private competitors in the Indian market was one of the few main reasons for the growth of the market to fall this horribly. However numbers paint a different picture. It shows that data on salary and sales for the 10 years, ending on 2018-19 of around 4,953 companies, depicted that sales of these companies slumped for four fiscals at a stretch beginning 2012-13.
Even though 2016-17 witnessed some recovery, it was transient. As it couldn’t be maintained, cos decided to cut salaries to keep their finances stable. In 2018-19, the percentage share of salaries in total sales revenue fell for the first time in 7 years. After inflation in the same period, this number fell even further to 3%, from 1.5% a year before.
With job scarcity at 45-year high, employers are probably taking advantage of decreasing bargaining power of workers to delay salary hikes.
Using 4,953 companies for the survey done by CMIE, it can be seen that growth in sales revenue for 2018-19 stood at 9%. When inflation happens, this number shall fall down to 3%. This slump could have serious consequences for the Indian economy.