Job Market Revival On Cards In Next Two Quarters

Industry lobby FICCI’s latest quarterly survey on manufacturing suggests slightly less optimistic outlook for the manufacturing sector in the third quarter, October- December 2017-18, as the percentage of respondents reporting higher production in third quarter has fallen vis-à-vis previous quarter.

Is this the bad news for the job market? While the survey point towards a bleak scenario, headhunters are optimistic. “Compared to the last two quarters, unlike December which typically is a go to sleep kind of month, its first time where we still continue to get job requirements. This is the period where quarter/requirements slows down by 15 percent but this is the only time where we are seeing that compared to last quarter which obviously was bad we have a upside of 20 percent,” noticed Kamal Karanth, former managing director of US based staffing firm, Kelly Services.

Recruiters say that the companies are trying to get their goods and services tax application, execution right. “Probably, they are gearing up for the action in the coming quarters and hence, they are hiring. I am seeing lot of action in automobile sector,” Karanth says who recently launched his own venture, Xpheno, a specialist staffing company.

The survey highlights that the proportion of respondents reporting higher output growth during the quarter in consideration has fallen to 47 percent against 50 percent of second quarter.

This less optimistic outlook for manufacturing in third quarter of current fiscal is reported to be due to factors like rupee appreciation impacting exports, issues with regard to GST implementation and subdued demand in several sectors,” pointed the survey. It also noticed that in the order books, about 42 percent respondents in Q3 are expecting higher number of orders as against 47 percent of Q2 2017-18 which again is reflecting subdued demand in economy.

Rituparna Chakraborty, co-founder and executive vice president, TeamLease, a staffing agency, found the outlook confusion. “One of the reasons for this outlook could be that there is instability in the small and medium scale sector who have still not been able to grapple with demonetization and GST. There are enough indicators which are saying that larger organisation, the bigger corporates across the country are going to contribute to more job creation which is huge manufacturing,” she said.

“I’m not worried about this impacting the job sector because manufacturing contribution to employment has been less than 12%. It’s not that manufacturing has been a big job creator in the near or the long term past. Maximum job creation has been happening from the services sector into formal employment scenario,” Chakraborty elaborated.

Aman Attree, HR Head, Hindustan Power projects feel the survey’s outlook talks about the short term impact. “People have higher expectations from manufacturing sector as it generate jobs for the masses. We definitely want manufacturing sector to pick up to create more and more jobs. However, I presume that things will get better in coming two quarters,” he predicted.

FICCI’s latest quarterly survey assessed the expectations of manufacturers for Q-3 (October- December 2017-18) for twelve major sectors namely auto, capital goods, cement and ceramics, chemicals and pharmaceuticals, electronics & electricals, food products, leather and footwear, machine tools, metal and metal products, paper products, textiles and textiles machinery. Responses have been drawn from over 310 manufacturing units from both large and SME segments with a combined annual turnover of over ₹3 lac crore. It also highlights that the capacity utilization in manufacturing remains low. The average capacity utilization for the manufacturing sector is about 75 percent for Q-2 2017-18 as reported in the survey which is similar to that of Q-1 2017-18. As was the case in Q-1 2017-18, the future investment outlook remains pessimistic as 73 percent respondents in Q-2 2017-18 reported that they are not planning any capacity additions at least for the next six months. Increasing imports, excess capacities, lower domestic demand from industrial sectors, high raw material cost, high interest rates are some of the major constraints which are affecting expansion plans of the respondents.

Hiring outlook for the sector remains subdued in near future as 85 percent of the respondents in Q-3 2017-18 are not likely to hire additional workforce in next three months, found the survey. This proportion is much higher than the previous quarter, where 73 percent of the respondents were not in favour of hiring additional workforce.