Job growth in the first year of the National Democratic Alliance government has been under pressure. According to data from the labour bureau's 25th Quarterly Report on Changes in Employment, 64,000 jobs were created in the most labour-intensive sectors in the March 2015 quarter. However, job growth in three crucial sectors - leather, textiles, and gems & jewellery - has been low or negative. In a three-part series, Business Standard takes a closer look at what's happening on the ground.
The gems and jewellery sector is paying a price for being a luxury product in the form of zero job creation in the current financial year so far. Last financial year, the sector had added only 4,000 jobs.
According to the industry sources, the downtrend in business, both at home and abroad, is due to slow global growth, which has reduced the requirement of new jobs to almost nothing.
"The industry is going through its worst time and India is not just losing out on exports, but also on its leadership position in the global market. With this, unemployment rate in the country is escalating drastically," said Pravinshankar Pandya, chairman, Gem & Jewellery Export Promotion Council (GJEPC).
According to the labour bureau's latest quarterly report for the January-March 2015 period on changes in employment, the sector - comprising products such as gold, silver, diamond and platinum - saw a decline of 6,000 jobs in the fourth quarter of 2014-15 after a reduction of 5,000 jobs in the December 2014 quarter.
Industry estimates put the total direct employment in the sector at nearly three million people, and the average growth in fresh employment generation was six to eight per cent till 2013-14. Of the three million people employed in the gems and jewellery segment, the diamond sector provides employment to 1.1 million people, another one million work in the gold jewellery sector, while the rest are employed in silver, platinum and other gems and jewellery verticals.
Lack of job creation in recent times is not only being attributed to global issues, but also domestic challenges like the rise of alternative employment avenues such as the Mahatma Gandhi National Rural Employment Guarantee Scheme.
"Hit badly by the global decline in demand for diamonds, several diamond polishing units have rolled their shutters down leading to a fall in manpower in the industry," said Mathur Savani of Surat-based Savani Brothers, a supplier of polished diamonds.
In the diamond sector alone, around 300 units have shut shop in Surat, which is the largest diamond polishing centre in the country, leaving thousands jobless. Around 3,500 remaining units are working with pay cuts. What makes things worse is that the rough times have coincided with the festive season, which is the peak trade season for the diamond sector. In a decent year, Surat does Rs 35,000-40,000 crore worth of business during the three festive months of October, November and December.
According to GJEPC, the current downturn in China and euro zone has severely impacted both demand and prices of polished diamonds and finished jewellery. The sector anticipates a 13 per cent decline in exports this year even as it hopes for government support.
Currently, the US is the only demand generating country in the world for jewellery, say industry sources. Domestic market is also slow. Economic slowdown in various industries has led to a decrease in the spending power of people. Industry leaders are not hopeful with regards to the festive seasonal demand during this Diwali. This is being attributed to a lack of enough auspicious dates during the wedding season this year.
While new job creation remains a problem, retaining existing manpower, too, is a challenge as many labourers are switching to other modes of employment.
Vipul Shah, managing director and CEO of Asian Star Company, said: "Forced to cut production, employment generation has also taken a hit in the gems and jewellery industry. The industry is now trying to manage and retain the current workforce."
The success of MGNREGS has seen workers from other states returning to their hometowns as they were able to get jobs there under the scheme.
Meanwhile, on the jewellery manufacturing side, technology adoption as well as upgradation by the organised sector has also led to attrition in the unorganised sector.
"Many skilled workers in jewellery manufacturing have shifted to modern production units as they are getting higher wages compared to conventional manufacturing units," said Haresh Soni, chairman, All India Gems & Jewellery Trade Federation.