Where have all the jobs gone?

There are nearly 11 million youths who have the requisite qualifications and skill sets, but not employment. In the absence of policy intervention, it is slowly taking the shape of a national epidemic with terrible social consequences.

Published: 25th August 2013 12:00 AM  |   Last Updated: 26th August 2013 09:50 AM   |  A+A-

tower.jpg“After graduating in 2011, I must have sent my CV to nearly 500 places—be it to companies on their sites, or to job portals or I have handed over the CV personally. The standard response is ‘we will call you back’, or an automatically generated message says, ‘your application has been received. We are in the process of short listing. You will be intimated soon.’ I am not tired. I am exasperated,” says 25-year-old Ankit Dubey, an electronics and communications engineering graduate from Bhopal-based Patel College of Science and Technology.

Dubey is one among the 10.8 million jobless Indians who have the requisite skill sets and the qualifications but not the job. As on January 1, 2010, the number of unemployed was 9.8 million of a total population of 1.21 billion.

According to the most recent government statistics, unemployment in India has gone up; the rate is 2 per cent in rural India and 3 per cent in urban India. The ratio of unemployment is 27 per 1,000 people, up from 25 two years ago.

India, when compared to other developed and developing nations, has a dismal percentage of employment (see The World of Jobs). And the problem is more accentuated now. Why is India, despite its teeming “demographic dividend” or employable youth, unable to create jobs? The answer lies in the present state of the economy which is going through the worst phase ever because of reasons domestic and foreign.

The Indian economy in the present day is in tatters, compounding the problem of joblessness. A falling rupee perched at Rs 64 against the dollar, high cost of capital, near-absence of investor sentiment, coupled with companies not expanding, have left the job market with very few openings.

“High cost of capital leaves companies very cautious. There is no expansion; in fact, there is de-growth in manufacturing sector which is among the biggest employers in the country. Poor investor sentiment is also adding to the problem as new investors are now toying with the idea whether or not to invest in India. The cycle is vicious. Some stability can be expected after a new dispensation comes to power,” an analyst with a global brokerage firm said requesting anonymity.

According to a survey jointly conducted by FICCI and Ernst & Young, even though over 40 million people are registered in employment exchanges, only 0.2 million get jobs annually. Even startling is the fact that about 80 per cent of the Indian workforce does not possess identifiably marketable skills. Equally sad is the fact that the school dropout rate in India touches 56.8 per cent by the time students reach the qualifying examination in the 10th standard which further leads to unemployability. “Promoting entrepreneurship is the only way. That’s what happened in the US. Unlike us, they didn’t shy away from encouraging start-ups. India’s risk-taking ability is pretty low and should change fast. In India, a failed business start-up is seen with contempt,” says Dr R Narasimhan, Dean, Woxsen School of Business, which is set to open the country’s first business school in India, with focus on entrepreneurship, in Hyderabad. The school is likely to start operations in 2014.

Dubey, out of sheer desperation, is now willing to take up any other job and blames mushrooming engineering colleges in Madhya Pradesh. “There are over 100 engineering colleges in Bhopal alone; so automatically the job pie shrinks, leaving very few jobs for people from engineering colleges other than the IITs. I remember having gone for an interview in Bangalore in April, for a well-known global firm. What surprised me was the fact that the walk-in interview was not held in an office instead in a hall as over 1,000 candidates had turned up. I thought I had walked into a wedding reception,” Dubey said.

Till recently India was one of the most sizzling economies with its Gross Domestic Product (GDP)—or the total value of goods and services produced in the country—clocking above 8 per cent growth during 2004-05 and 2009-10. But not anymore.

I have no money to eat. I have not been able to carry on with my MRI as I have no money for it. My company has a policy where a permanent employee has the provision of taking one-year leave, if he/she is under distress.

Manpreet Bhandari, 37

From 2004-05 till 2010-11, the net job creation declined to just 2.2 million even as the economy grew at an average rate of 8.6 per cent. The biggest problem was the decline in the numbers joining the self-employed category by 25.5 million in the later period. The number of urban regular jobs created fell sharply from 13.7 million in the 1999-2005 period to just 5.5 million during 2004-10. “Creation of decent jobs outside of agriculture is one of the biggest challenges that confront the policy makers trying to achieve faster, sustainable and more inclusive growth,” Institute of Applied Manpower Research (IAMR), an autonomous institution and the only think-tank under the Planning Commission, said in its recent paper titled ‘Jobless and informalisation, challenges to inclusive growth in India’. “It’s an interesting dilemma where companies are unable to find the right talent and candidates are unable to find a suitable job. India Inc should invest in ensuring there is a right job-candidate fit and have robust training programmes to drive employee performance. Such measures will help companies remain attractive for the workforce in the long term,” says Moorthy Uppaluri, CEO, Randstand India, a jobs monitoring agency.

For them, it was economical to hire a fresher from an Indian college than taking me with a foreign degree and no experience. There were times when I made it clear that I was open to work for a smaller pay package. For some interviews, I had to hide the fact that I have a foreign degree. But nothing worked.

Naveen Vadde

This case illustrates the point about how skill set and job mismatch lead to joblessness, especially in a country like India where there are fewer jobs for far too many aspirants.

When Hyderabad-based Naveen Vadde completed engineering (computer science and electronics or CSE) in 2007-08, the IT sector was in the midst of a slowdown. While Vadde scored 70 per cent at the end of the four-year B.Tech course, he got an offer letter from HCL Technologies through campus recruitment in April 2008. However, he failed to get the joining letter, which was expected by July 2008, thanks to the economic recession. After waiting a couple of months, Vadde started attending walk-in interviews, without much success.Meanwhile, not finding a placement that matched his qualifications and skill sets, Vadde opted for a master’s degree abroad. Being from a humble background, his father Vadde Sriramaiah, who runs a local transportation business, mortgaged their family property for Rs 25 lakh to fund his son’s Master of Science degree at the University of Bradford in the UK hoping that the foreign degree would remove all impediments in the way of his son securing a job. But that did not happen.

When Vadde returned from the UK in 2011, the situation was worse. The IT sector was slowdown-hit and pink-slips had become the order of the day.

“For them, it was economical to hire a fresher from an Indian college than taking me with a foreign degree and no experience,” recalls Vadde, adding, “If that’s the case for MNCs, I was too expensive for small companies. There were times when I made it clear that I was open to work for a smaller pay package. For some interviews, I had to hide the fact that I have a foreign degree. But nothing worked.”

Vadde is now trying his luck to find a job as a lecturer in an engineering and degree college, while helping out his father in his business.

But where have the jobs gone? Why has job creation slowed down? “The job market has not been vibrant as it was about five years back,” says Rajiv Bhatt, director with Corporate Culture, India’s leading placement agency based out of Mumbai.

He explains: “From 2006 to 2008, the business confidence levels were very high. India was in a growth mode, there was political stability. Companies chose to expand instead of consolidating themselves which led to job generation all over. We had difficulty finding manpower. Turn to 2013; the same clients who would ask for qualified manpower at all levels now want us to consult them on how to reduce staff strength by as much as 50 per cent.”

Experienced manpower bears the brunt of the slowdown due to their relatively higher cost to companies. Agrees Bhatt: “What we now find is a near-freeze in senior level recruitment as companies do not want to pressure their wage bills any further; only very necessary recruitments are being made. It will be at least three more quarters when one can hope for some realignment in the job sector.”

Before the global slowdown in 2008, that descended like blinding December fog on India’s national income, the economy was within the striking distance of touching the $2-trillion mark and India was about to join the elite group of the globe’s richest economies.

After graduating in 2011, I must have sent my CV to nearly 500 places—be it to companies on their sites, or to job portals or I have handed over the CV personally. The standard response is ‘we will call you back’, or an automatically generated message says ‘your application has been received. We are in the process of short listing. You will be intimated soon.’ I am exasperated.

Ankit Dubey, 25

The country was headed to become a global manufacturing behemoth like its neighbour China which, with a population of 1.35 billion, has 74 per cent employment rate while India with a population of 1.21 billion mouths to feed has an employment rate of just 39.8 per cent. Citing a peculiar phenomenon seen in Kerala, Joseph K J, professor, Centre for Development Studies Thiruvananthapuram, says job creation had slowed down despite a growth in the economy. “We have jobless growth in the state. A paradox is when Keralites seek jobs outside the state, outsiders come here. This is pertinent with the increase in migrant labourers,” he says.

According to data collated by IAMR, in the five years starting 2004-05, employment in the manufacturing sector actually declined by 5.03 million.

During 2004-2010, only 460.22 million, or 40 per cent of India’s population, was employed. All sectors put together had added only 2.76 million jobs in India.

“While defensive sectors like consumer goods, healthcare services and pharma are doing well, there are sectors such as mining and metals and infrastructure where there is a slowdown in hiring. Overall, the market is still. The overall slowdown in economy and a bleak economic scenario have hit the job market in India. From next three quarters, the market will look better,” says Atul Vohra, managing partner, Transearch India, an executive search firm.

Joblessness in India is fast becoming a rule rather than exception. With the slowdown and lack of job creation or shrinking manpower requirements, the corporate that has chosen to ‘tread very cautiously with its manpower requirement’ has also to a large extent become dehumanised.

As Devdutt Pattanaik, mythologist and chief belief officer with the Future Group, in his recently published book Business Sutra says: “Modern management systems were more focused on an objective institutional truth, rather than individual truths. People were seen as resources to be managed through compensation and motivation. They were like switches in a circuit board. But humans cannot be treated as mere instruments. They have neo-frontal cortex. They imagine. They have beliefs that demand acknowledgement.”

What Pattanaik wants to relate is illustrated through an example. Manpreet Singh Bhandari, a Bangalore-based sales professional, was employed with a leading multinational computer maker for three years. Bhandari, who has 14 years of experience under his belt with well-known multinationals, was asked to leave despite being in poor health. He suffers chronic migraine and spondylosis and had to be hospitalised on several occasions.

Bhandari had sought a transfer to another department on health grounds and had duly informed his HR department about his health condition. Despite the company’s policy of allowing one-year leave to employees who are not in good health, no such courtesies were extended to him.

“I have no money to eat. I have not been able to carry on with my MRI as I have no money for it. My company has a policy where a permanent employee has the provision of taking one-year leave, if he/she is under distress,” says Bhandari and alleges that his immediate bosses did not allow him the privilege.

When he contacted his senior HR boss, the reply was: “By mistake they have terminated you”. Bhandari is now fighting a legal battle against his previous employers seeking reinstatement and six months’ compensation. The company is, however, paying him just only two months’ salary and `2 lakh ex-gratia.

On being asked if he is applying elsewhere, he says, “This could happen to anyone. I have sent mails (for employment) to four companies, but nothing has transpired as yet.”

The economic slowdown, political uncertainty and high cost of recruitment are forcing companies to redraw their hiring patterns.  “We now employ on contractual and project-to-project basis. The days of strong bench strengths are not required as export orders are shrinking by the day. So much so that the management has decided to hire only for six months at a time,” said an HR head of a leading IT firm, requesting anonymity.

And the impact is seen in almost across all sectors. “The job market has slowed down not just in India but across the globe. A weak economic climate forced companies to relook at their hiring patterns. Particularly, those in manufacturing and services, who employ in huge numbers, are worst-hit due to the slowdown,” says B Ashok Reddy, president, global human resources and corporate affairs, Infotech Enterprises Ltd.

From the experienced to those getting into their first jobs, the situation does not look much different. For 23-year-old Sakshi who hails from Jharkhand, getting a job with IBM was a dream come true. But the reality of the job lasted for a mere 48 days before she was asked out with no reasons given. “They did not give me any reason nor did they share the test scores with me. I was asked to leave,” says Sakshi who is now doing certification courses to make sure that she does not the same fate the next time around.

 India needs 15 million-a-year jobs to make sure that the ‘demographic dividend’ or 35 per cent of India’s youth is gainfully employed. But does the country have jobs to provide gainful employment to all? As of now, the answer is a pessimistic ‘NO’.

With inputs from Sunitha Natti, Vishakha Talreja and Prabhat Nair

Manpreet Singh Bhandari, 37 Bangalore-based sales professional with 14-year experience sought transfer to another department on health grounds after three years in a multinational computer maker. Despite their policy of allowing one-year leave to employees who are not in good health, he was asked to leave.

Company’s excuse: Senior HR official replied: “By mistake they have terminated you.”

What now: Bhandari is now

fighting a legal battle seeking reinstatement and six months’ compensation. The company is, however, paying him only two months’ salary and `2 lakh ex-gratia. He has applied to four companies, but nothing has transpired as yet.

Naveen Vadde

Scored 70 per cent in B.Tech, got offer letter from HCL Technologies in April 2008. Failed to get the joining letter, which was expected by July 2008. Attended walk-in interviews, without much success. Father mortgaged property for `25 lakh to fund his

MS degree in the UK.

Qualification: MS

University: University of

Bradford, UK

What now: Vadde is now trying his luck to find a job as a lecturer in an engineering and degree college. Meanwhile, helping his father in his business.

Who to blame: Recession in IT sector

Ankit Dubey, 25

Went for an interview in Bangalore in April, for a well-known global firm. The walk-in interview was not held in an office instead in a hall as over 1,000 candidates had turned up.

Qualification: BE (Electronics and Communications)

College: Patel College of Science and Technology, Bhopal

What now: Out of desperation, he is now willing to take up any other job that comes his way.

Who to blame: Dubey attributes his joblessness to mushrooming engineering colleges in his state, Madhya Pradesh.

“After graduating in 2011, I must have sent my CV to nearly 500 places—be it to companies on their sites, or to job portals or I have handed over the CV personally. The standard response is ‘we will call you back’, or an automatically generated message says ‘your application has been received. We are in the process of short listing. You will be intimated soon.’ I am exasperated.”

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