When it was announced, demonetisation was expected to boost government revenues through better disclosure of income by individuals and businesses. That, in turn, was expected to increase government and lead to creation of more jobs. But six weeks into the demonetization drive, the calculations appear to have gone awry. There are reports of many jobs having been lost as companies have been forced to lay off employees because of cash crunch. And the situation is expected to get worse in the short term before things start looking up. Most experts believe hardest hit will be the unorganized sector where most of the transactions take place in cash. Anuradha Upadhyay, Founder Member, Careerinsect.com, a career consulting firm said, “Contract jobs might suffer harder than the permanent one slightly longer than expected because of the little cash circulating in the market. Unorganized sector is a major hit, since major dealings take place in hard cash.” The firm has not witnessed enough job offers being rolled out since the beginning of November. They expect employment opportunities to get delayed for next two to three months. Concurring with Upadhyay’s view, K Sudarshan, Managing Partner- EMA Partners India, said, “The job demand at the senior level is intact; only the unorganized sector has been hit but the impact is likely to persist for the next 2-3 months.” The contraction in the output growth has started reflecting on the employment scenario. The formal and informal sectors of the economy were already struggling with depressed demand and investment and now the demonetisation impact is forcing them to cut jobs and freeze hiring. Companies in sectors like textile and leather are likely to be impacted by the demonetisation move with cash crunch leading to delay in salaries and people being let go. An analysis by ASSOCHAM states that trade in major clusters of leather and leather products in India has been hit hard by the government’s move of demonetisation. Majority of total respondents (85) said that their production has declined by over 60 percent while number of workers in leather factories in aforesaid cities has come down drastically by about 75 percent as they are not being paid on time and even industries have also laid off employees due to lack of finances, highlighted the survey-cum-analysis. Further, in travel sectors too, smaller companies are feeling a pinch. As per ASSOCHAM, travel trade has reported around 40-45 percent drop in bookings for international tourists while business for the domestic travellers has gone down by well over 65 per cent. There is also slowdown in the number of bookings from the international tourists, considering November, December and January being the peak season of international tourists’ inflow. “While the travel trade including airlines, hotels and railways have mostly shifted to online bookings, the impact is seen largely because of erosion in the consumer confidence as most of the self employed people have been witnessing a sharp decline in earnings while professionals employed in the organised sector too have been affected psychologically by the ‘scarcity syndrome’, said D S Rawat, Secretary General ASSOCHAM. Rituparna Chakraborty, Executive Vice President, TeamLease Services, said that the impact on jobs on formal sector will be there for a short run, but they will rebound and come back in 5 months. All sectors which are dependent on customer’s dicretionary spends will be affected, she said. She further said that the informal sector will see a bigger impact. These include sectors like infrastructure, real estate, textile, garment and construction, according to Chakraborty. She added that, however, sectors like banking and digital payment sectors have tripled their demand for manpower. HR experts said that sectors like hospitality, real estate, tourism and auto which see an additional requirement of manforce during year-end period will no longer need them since people are cutting down on these spends. “We expect the longer term impact is in the sale of products of larger value, for example within the heavy vehicles and machinery industry. As a result, there has been a number of credit extensions offered which has brought together finance, sales and procurement departments within organisations. It is very unlikely we will see any long term effect on job losses,” said Nicolas Dumoulin, Managing Director, Michael Page India. A slowdown in manufacturing in the automobile sector is apparent as Maruti Suzuki, Hyundai Motor, Honda Motor, Mahindra & Mahindra, Ford Motor and Renault-Nissan have scheduled shutdowns of a week to 15 days. Further, a jute mill in West Bengal’s Howrah district decided to shut shop citing its inability to pay workers in the absence of Rs 500 and Rs 1,000 notes that were scrapped by the government. Over 40 percent layoffs of contractual work force is being reported from Noida’s garment industry in the last 40 days since the demonetisation of high value currencies were announced.
[sOURCE:-Money Controll]
