India's employment outlook next year remains bleak, although the skill levels have improved among new entrants to the job market, according to the findings of a new survey.
Only a slight increase of about 1.4% in overall hiring numbers was predicted by the India Skills Report 2014 compiled by PeopleStrong, a human resource company, and skill assessment firm Wheebox that conducted the survey in association with the Confederation of Indian Industry (CII).
The report said the outlook for jobs is far from bullish in the year ahead. While sectors such as engineering, hospitality and travel expect their hiring to rise, those like banking, financial services and insurance, information technology (IT) and IT-enabled services, and manufacturing are not expecting a major increase.
That's bad news for new entrants to the job market in an economy that's struggling for recovery from its weakest growth in 10 years. Gross domestic product (GDP) growth fell to 5% in the fiscal year ended 31 March, from 6.7% the previous year, and is expected by economists and multilateral organizations to weaken further in the current fiscal.
"At sub-5% GDP growth, what does one expect," said Pankaj Bansal, chief executive officer (CEO) and co-founder of PeopleStrong.
"If you talk to the CEOs across sectors about their next year's plan, the first thing they talk about is cost cutting. When the focus is on cost cutting, you will see optimization of resources than new job creation," he added. "The government needs to put in place enough reforms to create that environment (of more investment and job creation). When expansion plans are stuck, you don't add jobs."
Many companies have put investment plans on hold and are seeking to cut costs because of slowing demand, higher borrowing costs and delayed government approvals for projects.
Sameer Khanna, head of human resource at telecom firm Ericsson India, said that in the coming months, the company expects its hiring of freshers to be "subdued if not zero", but lateral hiring will continue.
"Once the telecom sector improves, the job situation will improve. Then the number of fresh hires will increase," Khanna said.
The survey also found that the job trend is shifting, with many companies preferring to hire more vocationally trained and management graduates than engineering degree or diploma holders. "Even the IT and software industry plans to hire more of management graduates than other domains," said the survey.
Ketan Kapoor, CEO of Mettl, a skills assessment company, said what industries are looking these days are "hands-on people".
More than one million people from professional colleges join the labour force every year in a country that turns out more than four million graduates annually, including more than 600,000 engineering graduates.
The study found that one in three joining the labour force is employable—an improvement in a country where companies including IT services providers have for long complained that new graduates lack necessary job skills. A previous study conducted by the IT industry lobby group Nasscom and considered the benchmark on the skill levels in the economy had found that only one in four joining the labour force was employable.
Though the overall job readiness among Indian job market entrants was pegged at 34%, the sectors with people who were most job ready were pharmaceuticals (54%) and engineering (51%), the survey said.
Those possessing a degree or diploma from industrial training institutes, and Master's degrees in computer applications and management graduates were next in the sequence, with an employable percentage of 46%, 43% and 41%, respectively, the report added.
The report was based on a survey of some 1,800 educational campuses and 100 companies across 10 industry sectors including manufacturing, automobiles and telecom.
The skill levels were gauged through an assessment test in which 100,000 people took part, said Nirmal Singh, CEO of Wheebox.
"The condition of (employee) pools for rest of the domains (like) arts, commerce, and polytechnics was grave, as in these domains, not even one/third of test takers could cross the benchmark levels," the report said.
Gender wise, the female skill pool performed better than the male, with an employability percentage of 42% compared with 33%. The study found that a majority of the "employable pool" comes from Punjab, Tamil Nadu, Uttar Pradesh, Delhi, Andhra Pradesh, Haryana, Gujarat, Odisha and West Bengal.
"The information of about two-thirds of our skill pool not being fit for employment is not a great situation for a country where some 12 million people (including graduates and new entrants into the unorganized job market) enter the labour market every year. But this should not surprise, knowing that companies have been complaining about the gap," said PeopleStrong's Bansal.
S. Ramadorai, adviser to the Prime Minister on skills development, said it was essential to match skills with jobs and promote "job-led growth" in a country with more than 600 million people in the working-age group.
"We need to focus efforts on things that generate employment such as cultivating entrepreneurs and promoting SMEs (small and medium enterprises)," Ramadorai said. "Whether it is services or manufacturing sector, our mantra should be 'more with more for more'," he said. "By this I mean generate more output with more people."
Originally published by Mint on 9 December 2013