India Inc Employment Growth Rate Drops To 1.5% In FY24 Against 5.7% Seen In FY23

The employment outlook in the Indian corporate sector appears bleak, according to a latest report released by the Bank of Baroda (BoB).

The public sector bank based on an analysis of balance sheets of 1,196 companies noted a decline in the employment growth rate to 1.5% in FY24, down from 5.7% in FY23.

In absolute terms, companies added fewer than 100,000 employees in FY24, compared to 333,000 in FY23.

The drop in employment growth rate is attributed to the post-pandemic hiring surge in FY23. According to the report, the same fiscal also saw significant attrition which includes voluntary as well as involuntary resignations. However, the necessity to increase employment was not as pronounced in FY24, especially as some sectors undertook staff rationalisation based on business needs.

Out of the 1,196 companies surveyed by BoB, 700 saw an increase in headcount, 121 remained flat, and 375 experienced a decline, creating a mixed picture at the micro level.

The IT sector, holding nearly 25 percent of the total headcount, and banking, with 22 percent, dominate employment in the corporate sector. Finance, healthcare, and auto sectors follow with a combined 14.5 percent share. As per the report, these eight sectors significantly influence overall employment trends.

The report highlights a "job destroyers" category, where headcount reductions were notable, particularly in IT and textiles. On the other hand, "job accelerators," including services, steel, and construction, saw double-digit employment growth, driven partly by government incentives in the housing sector.

The BoB report also saw sectors like retail, trading, and finance also contributed significantly to job creation, with finance growing due to the expansion of NBFCs. The "job creators" category, with 4-10 percent growth, includes telecom, plastic products, banks, and FMCG. Meanwhile, "job stabilizers" saw minimal growth, such as chemicals and media, which had a 3 percent increase.

The report notes that the data focuses on employment in India, excluding outsourced staff, which is not reflected in official headcounts.

“Despite an 8.2 percent economic growth in FY24, following strong growth in the previous two years, corporate sales growth slowed. However, profits remained robust, aided by cost savings and rationalization efforts,” the report said.