Hiring and compensation growth has hardly kept up with the surging profits of Indian companies which nearly quadrupled between financial year 2019-20 and FY23, according to the Economic Survey 2023-24.
“In terms of financial performance, the corporate sector has never had it so good. Results of a sample of over 33,000 companies show that, in the three years between FY20 and FY23, the profit before taxes of the Indian corporate sector nearly quadrupled,” the survey says, adding that it is in the interest of the companies to step up hiring and worker compensation.
The slow pace of investment in machinery and equipment and intellectual property products will delay India’s quest to raise the manufacturing share of GDP, delay the improvement in India’s manufacturing competitiveness, and create only a smaller number of higher-quality formal jobs, cautions the Economic Survey.
Job creation happens mainly in the private sector and many of the issues that influence economic growth, job creation and productivity are in the domain of state governments, says the Economic Survey. “India needs a tripartite compact, more than ever before, to deliver on the higher and rising aspirations of Indians and complete the journey to Viksit Bharat by 2047,” it states.
“Public investment has sustained capital formation in the last several years even as the private sector shed its balance sheet blues and began investing in FY22. Now, it has to receive the baton from the public sector and sustain the investment momentum in the economy,” says the Economic Survey.
IT hiring unlikely to pick up significantly
Hiring in the information technology sector had slowed down considerably in the financial year 2023-24, and even if hiring does not decline further, it is unlikely to pick up significantly, states the Economic Survey.
However, leveraging the initiatives taken by the government and capturing the untapped potential in emerging markets, exports of business, consultancy and IT-enabled services can expand, the survey notes.
Deploying capital-intensive and energy-intensive artificial intelligence (AI) is probably one of the last things a growing, lower-middle-income economy needs, the Economic Survey points out.
“The corporate sector has a responsibility, as much to itself as it is to society, to think harder about ways AI will augment labour rather than displace workers,” it says.
As India looks forward to creating millions of jobs by 2030, dovetailing this transformation in the demand-supply dynamics of services is pivotal to meeting the hiring requirements in the medium term, the Economic Survey says.
The total number of factory jobs grew annually by 3.6% between 2013-14 and 2021-22. They grew faster at 4.0% in factories employing more than a hundred workers than in smaller factories (those with less than a hundred workers). The annual growth rate was 1.2% in the latter set of factories. In absolute numbers, employment in Indian factories has grown from 1.04 crore to 1.36 crore in this period.
“There remain long-existing challenges of formalising a burgeoning workforce, facilitating job creation in sectors which can absorb workers shifting from agriculture, and ensuring social security benefits for those in regular wage/salaried employment,” the Economic Survey says.
The state governments can grease the wheels of hiring by businesses by easing the compliance burden and reforming laws on land, etc., to suit the priorities of development, it adds.
