Thousands of contract workers lose jobs in India

Thousands of contract jobs have been axed since April in the automotive, roads, small textile and other sectors that have been battling with falling sales, leading to production suspension. 

* July 9, Gurgaon: Maruti sends 200 contractual workers on indefinite leave

 * July 15, Mumbai: Mahindra & Mahindra removes more than 500 temporary workers at its Chakan plant

 The list is only getting longer by the day.

With India’s manufacturing sector slamming the brakes on production, the fallout is being felt by contractual labourers.

Thousands of contract jobs have been axed since April in the automotive, roads, small textile and other sectors that have been battling with falling sales, leading to production suspension.

Staffing services companies have said those in the manufacturing, logistics and auto components, supply chain and energy sectors have seen a 10-30 per cent drop in demand for temporary staff, against a 10 per cent growth last year. Long gone are the days when anyone with a hand and a leg was being hired by companies on their temp rolls.

“The manufacturing sector is not doing well,” says Aditya Narayan Mishra, president, staffing services, Randstand India. “While hiring at some companies is down by 10 per cent, at others it is down 30 per cent.”

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While demand for temporary staff is down this year, the pattern of hiring for many companies has changed. 

“Companies are looking more at internal referrals and walk-ins,” says Sangeeta Lala, co founder & vice-president, TeamLease Services. “They are negotiating hard and are looking for cheaper resources but a better return on investment.”

Staffing solution firms say companies have become more specific in terms of selection ratio, which has gone up from 1:6 to 1:10 per job offer. Emphasis is on how long an employee can stick to the job.

Retail is witnessing a similar situation. An executive from Aditya Birla Group said it was doing very little temporary hiring now, as they have stable stores under Aditya Birla Retail. In new stores, they are hiring people on rolls.

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“All retailers have realised that having a large number of people does not mean better service and productivity and it is better to focus on training them and asking them to serve customers properly,” says Harminder Sahni, managing director, Wazir Advisors, a retail consultancy.

Others, however, say the retail sector will face more heat soon. Sunil Goel, director of human resource firm GlobalHunt, says the focus of companies is clearly right-sizing and cost optimisation. “Unlike in 2008, this will be a more gradual process. While a lot of job cuts are being seen in areas like media, communication and automobiles, we expect sectors like retail to also be affected.”

However, there is some good news from the consumer durables and fast-moving consumer goods sectors. 

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Consumer durables companies, including Panasonic India, Haier, Onida, LG and Samsung, are keeping action in the temp hiring market alive, though not as much as last year. Temp hiring for these sectors is down 15 per cent, against an upside of 20 per cent last year.

“You need people to push your products to the last mile,” says Suresh Kumar Bandi, divisional deputy managing director, Panasonic India. “Dealers typically don’t have the time. In-store demonstrators explain product benefits, speak about offers and try and convince shoppers to buy your products.”

Eric Braganza, president, Haier Appliances India, says: “You have an important sales peak during Onam in September. There is, of course, the festive burst that stretches from September to October or November, depending on when Diwali is celebrated. In markets such as Chennai, temp staff are also hired during the New Year period. Then, there is the big peak during the summer months.”

Generally, companies hire temp staff for six months to one year. Temp staff is provided with soft-skill training and on-the-job training.

HIRING HEAT

•  10-30% drop in demand this year for temporary staff across sectors
•  10% growth in demand for temp staff last year across sectors
•  15% fall in hiring in consumer durables and fast-moving consumer goods
•  20% growth in hiring in consumer durables and fast-moving consumer goods last year