The big jobs question: Are we in pink slip territory or not?

Brokerages and multinational banks might be cutting jobs in India, but there are still quite a few sectors that are poised to keep hiring through the next quarter, according to The Economic Times. The big question is, for how long?

According to the newspaper, more than three lakh jobs will be created in the information technology, business process outsourcing, healthcare, education, banking, financial services and insurance, and energy sectors between January and March. Last year, close to four lakh jobs were created, it said.

The report named companies like Fortis, Apollo, Max and Manipal, Dr Reddy’s Labs, Cipla, Glenmark and Sun Pharma, the Future group and the Aditya Birla Retail group among the companies seeking to hire staff over the next quarter/year.

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[caption id=“attachment_151724” align=“alignleft” width=“380” caption=“The usual suspect during an economic downturn, the financial sector, including banks, brokerages and insurance companies, is also not expected to be hiring in great numbers in the near future. WoodeyWonderworks/Flickr”]  [/caption]

In fact, Fortis Healthcare’s global CEO Vishal Bali told the newspaper that private hospitals alone could add up to 35,000 jobs next quarter.

The newspaper also carried another article about how state-run banks could hire up to five lakh employees over the next few years, even as multinational ones slashed their headcount.

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All this sounds rosy enough, but are these estimates really true?A story in Outlook Business magazine last month titled “The Return of the Pink Slip Blues” tells a rather different story.

This article notes that given the economic slowdown and global uncertainty, several companies are actually either letting go of excess employees or not planning to make new hires in the near future (although the situation is not as bad as 2008-09).

In particular, IT and ITES (IT enabled services) are feeling the brunt of the job cuts and hiring slowdowns. “It is estimated the increase in the number of jobs in the IT and ITES for the December quarter will be 41,600 as compared to 46,600 for the preceding quarter - a drop of over 11 percent,” the article noted.

Telecom is another sector singled out for brutal job cuts. “By the year-end, more than 5,000 people will be out of the sector, following layoffs at Aircel, Tata Teleservices, RCom and Bharti,” Outlook Business noted. The outlook for the sector in the near future doesn’t seem any better.

While The Economic Times agreed on the outlook for the telecom sector, it predicted that jobs growth would also slow in thefast-moving consumer goods, ancillary and construction industries.

The usual suspect during an economic downturn, the financial sector, including banks, brokerages and insurance companies, is also not expected to be hiring in great numbers in the near future. Nomura and Barclays are just some of the global financial institutions that have announced job cuts in India recently; more are expected to follow.

Indeed, unconfirmed rumours suggest that several brokerages have been quietly whittling down staff, away from the glare of news headlines.

While both stories (The Economic Times and Outlook Business) have taken contradictory stands, it’s likely that _Outlook Business_could be more accurate in its assessment of the job market. Frankly, it’s difficult to see how companies can keep on hiring robustly given the deepening slowdown in the economy and sliding profits. Global layoffs at multi-national companies will also bite Indian employees soon enough, if they are not already.

In fact, even state-run banks might soon go slow on their hiring, given that they’re the worst affected in the banking sector. Most brokerages expect these banks to experience an increase in the level of bad loans soon. If that happens, they will certainly not be in a mood to hire and burden themselves with higher costs.

In other sectors, those with jobs might also have to lower their expectations of performance-linked bonuses. A Business Standard report noted that given the poor financial performance of companies in the September-ending quarter, they could start cutting costs and the first step might be reducing or doing away with quarterly/performance-linked bonuses.

For now, however, India’s job-seekers can heave a sigh of relief. The situation is not bad as it was in 2008-09, but don’t pop the champagne corks just yet. Things can still turn bad if the economy doesn’t improve soon. In the end, a growing economy will create more jobs, not a slowing one.