Manufacturing and retail may see job additions in the future
A year ago, when the goods and services (GST) tax replaced a host of indirect taxes from July 1, 2017 onwards, it was estimated to create at least 2,50,000 to 3,00,000 new jobs by 2019. A year later in 2018, while the actual new jobs created are not very high, human resource consultants paint a rosy picture of the future.
Recruitment consultants said that the new jobs that will be created in sectors like manufacturing, logistics, transportation as well as in sectors like taxation.
Initial estimates suggest that among the 4.2 million jobs created between September 2017 and April 2018 (payroll data of EPFO), at least 5-8 percent would have been on the account of GST.
GST opens up temp jobs
The most number of temporary jobs that had opened up in the last few weeks leading to GST was that of tax consultants. The big four accounting firms were already working overtime and hiring staff to meet the rush of last minute client demands.
Aditya Narayan Mishra, CEO, CIEL HR Services said that when the job forecast was done, it was for a long-term horizon. “In the short term, tax consultants and IT implementation projects were created, that would have led to some employment generations. Actual new jobs will happen over a longer time period in the industry,” he added.
According to accounting regulator Institute of Chartered Accountants of India (ICAI) GST was to bring in an additional USD 2.3 billion (Rs 15,000 crore) in consulting fees for tax firms.
Smaller companies, especially SMEs who could not afford the huge fees of the big tax firms relied on experts from other firms.
A senior official from Motwani and Co, a tax firm from Mumbai, said that their revenues shot up by 30-45 percent as mid-sized and smaller traders did not know how to navigate the new GST systems.
“Separate billing systems, all electronic, had to be processed, and most of the SMEs had been dealing with cash and paper receipts,” he added.
Similarly, tax firms also had paid programmes for companies to understand the basic structure of GST. Special telephone lines were being operated 24/7 with temporary staff for July 2017 to handle the queries.
Another relatively smaller entity DK Singh and Associates operates out of a small office in suburban Mumbai suddenly had 20 to 30 companies lining up daily asking them to help plan the GST roadmap before July 1.
“We had to hire 100 tax experts immediately to manage the pressure from clients,” said Dharmkirti Singh, founder of the firm.
Sectors see formalisation
The primary aim of GST was to eliminate all informal transactions that could not be tracked. From July 1, 2017, electronic records of all buying, selling and movement of goods had to be stored. This was to be inspected and offenders heavily penalised.
Rituparna Chakraborty, co-founder & executive vice-president, TeamLease Services said that GST has a clear potential to create jobs.
“GST is an informality killer and has helped transformation of informal jobs into formal jobs. Most of the sectors that were taking time to understand it and has now been resolved. Companies are now fully prepared. Consumer-led sectors like automobiles as well as FMCG will see a growth in jobs,” she added.
Once a lot of informal activity dealt by laymen was replaced with proper source-based transactions, new jobs started getting added. This included inventory management teams, transportation inspectors as well as additions to the procurement teams.
Large companies already had structured teams managing all these activities. It was smaller companies who needed people on an urgent basis.
Also, lawyers also were in demand as companies wanted help in decoding the GST regime and what potential impact it would have on how business is done.
Green shoots sprouting?
The logistics sector will create 3 million new jobs in four years, as per a recent report by human resources firm TeamLease Services. According to the report, GST implementation has led to formalisation of the sector and helped bring in operational efficiency.
More number of companies have larger finance and operations team studying the tax structures closely. Being a dynamic rate regime with the GST Council meeting atleast once every month, the tax rates can be tweaked at any point.
On the other hand, initial reports of fudging data have cautioned authorities who have now tightened the screws around violations of GST. In this scenario, apart from the formalisation of jobs, there will also be a demand for compliance officers in companies.As Chakraborty puts it, the initial thrust has already been created by GST. How will individuals meet the skilling needs and make use of the opportunity being presented will be the real test in how many jobs for them will be created.