According to a government survey, the manufacturing sector added 72,000 employees during Oct-Dec on a net basis, but also laid off 113,000 casual workers, mirroring how factories may have asked those workers, who mainly get paid in cash, to leave during the peak weeks of note ban
As many as 152,000 ‘casual’ employees across thousands of factories may have lost their jobs during October-December quarter, a recent government survey has shown, signs that non-regular workers faced the axe first as companies grappled to deal with demonetisation and restricted cash.
During the quarter, eight key labour-intensive non-farm sectors—manufacturing, construction, trade, transport, accommodation and restaurant, IT/BPO, education and health—added 110,000 employees, but retrenched 152,000 casual employees compared to the previous three months (July-September), the latest Quarterly Employment Survey (QES), has shown.
“Out of (net) 1.11 lakh increase of employees, regular and contract workers accounted an increase of 1.39 and 1.24 lakh respectively whereas casual workers accounted a decrease of 1.52 lakh,” the survey said.
The number of part-time workers also dropped by 46,000 during this period, indicating that demonetisation may have forced factories to cut back wages that were primarily paid in cash.
The sudden move to outlaw Rs 500 and Rs 1000 currency notes has been widely believed to have hurt household spending on aspirational and essential products that have been the edifice of the India growth story.
Demonetisation has also upset families’ spending plans on cars, televisions and refrigerators that peak during the wedding season during October-March, and have forced companies to defer capacity addition plans.
According to the Labour Bureau Survey, the manufacturing sector added 72,000 employees during October-December on a net basis, but also laid off 113,000 casual workers, mirroring how factories may have asked those workers, who mainly get paid in cash, to leave during the currency recall’s peak weeks.
The manufacturing sector grew 8.3 percent during October-December, from 12.8 percent in October-December 2015-16 and 6.9 percent in July-September 2016-17, reflecting the poor consumer durables output and sales in the last few months following restricted access to cash.
India’s factory output measured by the index of industrial production (IIP)—the closest approximation for measuring economic activity in the country’s business landscape-- already contracted (-) 0.4 percent in December from a growth 5 percent in November indicating signs of faltering industrial activity because of demonetisation.Watch: How the economy is measured
In the IT/BPO sector, which added 11,000 employees during the period on a net basis, retrenched 20,000 casual workers.
“In the IT/BPO sector a change of (+) 10 thousand in Regular workers, (+) 21 thousand contractual and (-) 20 thousand in casual workers were observed,” the survey said.
QES is an establishment survey and provides the change in non-agricultural employment in the selected sectors. The survey covered 507,445 units in all, including 10,610 “common sample” units covered in the October-December quarter as also in the previous quarter.