Employment growth in corporate sector declined to 1.5% in FY24: BoB report

The growth in employment in the corporate sector slowed to 1.5 per cent in financial year 2023-24 (FY24) from 5.7 per cent in FY23, according a report released by the Bank of Baroda on Wednesday.

It claimed that just 90,840 new people gained employment in FY24, compared to 333,000 in FY23,

“The employment growth scene in India Inc. was quite lacklustre when looked at the aggregate level. Higher growth in FY23, the base effect, can only partly explain [this] low growth,” the report noted.

The report notes that the reason for this slowdown is that FY23 was the first year post pandemic when there was a certain degree of voluntary and involuntary displacement of staff, leading to a tendency for growth in employment to be higher in FY23 as activity was ramped up. 

“The same necessity was not felt in FY24 resulting in a lower growth rate,” it noted.

Sectorally, the report notes that retailing (19.4 per cent) and trading (16.2 per cent) have been at the forefront in terms of creating jobs, followed by infrastructure (15.8 per cent), realty (13.6 per cent) and iron & steel (12.1 per cent). 

Meanwhile, few sectors like hospitality (-11.9 per cent), logistics (-11.8 per cent), business services (-6.3 per cent), textiles (-5 per cent) among others saw a decline in the headcount during the year. 

To address the question of whether or not there is a relation between job creation rate and sales in the year, the report juxtaposes the two and finds that there is no clear relationship between growth in employment and sales during FY24. 

Trading witnessed growth in employment even while sales declined. The same holds for plastic products to an extent. For hospitality, business services and electricals where employment declined there was growth in sales. 

“Therefore, future prospects may not necessarily be linked to growth in sales and would vary across industries as well as individual companies,” the report noted. 

The report obtained employment numbers from a sample of 1196 companies, with cumulative net sales worth Rs 99.3 trillion in FY24.

Since information on employment is provided only in the annual reports of companies, hence the sample used here is based on their availability. This sample, however, includes only the large to medium companies and excludes the micro and small enterprises.

“A limitation to using these numbers is that the quantum of outsourcing is missed as companies report only permanent staff on their rolls. Several industries use ‘outsourced staff’ for functions like sales where remuneration is performance based,” the report noted.