India added an estimated 20.20 lakh people in the formal workforce during the first two months (April and June) of the current financial year, driven by expert services.
Data gathered from the Employees’ Provident Fund Organisation (EPFO) show that these payroll additions are being made in the ‘expert services’ category, which comprises private security agencies, small contractors and manpower agencies, thus indicating that the bulk of jobs are being created in low-paid categories, while established sectors such as manufacturing and financial establishments are yet to recover.
Expert services accounted for 45 percent of the total payroll additions in April and 46.7 percent in May.
A senior research fellow from a Delhi-based think tank told Moneycontrol on condition of anonymity, “This is a worrisome trend, since these are contractual jobs with low wages and no bargaining power. Moreover, in the long term, it could impact consumption and demand."
“It indicates that well-paid jobs are missing,” the person added.
Reduction of highly paid employees
According to Prashant Singh, Vice-President and Business Head, Compliance and Payroll Outsourcing, TeamLease Services, although growth is supposed to be across all sectors for unskilled and highly paid employees, due to COVID-19, and, more so, due to financial stress and impact on businesses, organisations had to cut labour costs through reduction and rationalisation in the highly paid employee categories.
"Highly paid employees were brought down from the system and companies have deferred recruitment as well in that category. Many companies are placing third-party contractors for new positions to fill and the companies are taking cautious steps in hiring permanent employees," Singh said.
"This was the reason for high low-wage work positions and why contract labour count was encouraged during this season," he concluded.
Lohit Bhatia, President, Workforce Management, Quess Corp, noted: "When we say ‘expert services’, these include all forms of outsourcing – staffing, security and facility management services, to name a few. As India’s foremost business solutions provider and staffing service, we believe that the creation of frontline jobs is crucial to the economy. The growth of employment in frontline jobs and expert services clearly shows that outsourcing services are growing formal employment."
"Most of this workforce comprises first-time job seekers, and this provides financial inclusion, social security coverage and sustainability. During Q1 of the current FY, it indicates the resilience of expert services and it is an early sign of outsourcing services adding new employment," Bhatia added.
"Notably Q1-21 started with the Covid 2nd wave impacting most businesses in sentiments, however it was not as bad as last year during Covid 1st wave. The industries were allowed to operate with limited workforce and essential services again picked momentum due to the lockdown. Ironically this time, because of health and hospitalisation that impacted most workers associated with manufacturing units, the essential services and facility management companies had to operate with additional employments to ensure continuity," said Suchita Dutta, Executive Director- Indian Staffing Federation.
The implications of the EPFO data could be an indicative that the schemes announced by govt under ABRY have helped companies to include additional ground/entry level beneficiaries, Dutta added.