Sunil Jain: Mixed picture

PERSPECTIVES

While NCAER's Business Confidence Index is up to an all-time high, the picture is not uniform across sectors (there has been a sharp decline in the optimism of consumer durables), across regions (southern firms have shown a decline), firm sizes (those with a turnover of less than a crore a year are less optimistic than they were in the last round) and even across ownership types (PSUs are less confident compared to the past, and in comparison with private sector firms). On the labour front, the survey shows a labour market that is a lot less tight than generally believed, especially when it comes to unskilled workers "� 65 per cent of firms see no change in the number of unskilled workers they will be hiring in the next three months, though this is down from the situation three months ago. Around 41 per cent of firms said they saw no change in the cost of labour over the next six months, and around half said there would be just a 2.5 per cent hike in wage levels. All told, the picture squares with corporate earnings data which shows that labour is not getting to share in the spurt in corporate earnings. 
 

Percentage Distribution of Respondents Change in the Cost of Labour in the Next 6 Months
Sectors	Decrease	No Change	Increased by
			2.50%	>5%
Consumer Durables	1.7	37.3	54.2	6.80
Consumer Non-durables	2.9	38.2	54.4	4.40
Intermediates	0.8	36.1	56.3	6.70
Capital Goods	0.0	36.7	55.8	7.50
Services	0.0	70.4	25.9	3.70
All Sectors	0.9	41.4	51.6	6.20
Source:  NCAER