Joblessness: Modi's Achilles' heel of 2019 elections

• In 2013 election campaigning, Modi PM candidate of the BJP, at a rally in Agra thundered "If the BJP comes to power, it will provide one crore jobs every year" which is now haunting him.
• In May 2017, a Labour Bureau quarterly report noted that a mere 230,000 jobs were created in eight key sectors from Apr-Dec 2016, a far cry from Modi's 2013 promise. This, when over a million aspirants enter the Indian job market every month. 
• The GDP growth slipped to 5.7% in the Apr-Jun quarter, the lowest in three years, with manufacturing growing at a five-year low of 1.2%, from 10.7% a year ago.
• CMIE estimates that about 1.5 million jobs were lost during January-April 2017, the first quarter after the Nov 2016 demonetisation exercise. Worse, India is set to see a further 30-40% reduction of jobs in manufacturing compared with last year.
• With a general election in less than two years, the dearth of jobs could prove the Achilles' heel of the Modi government, rein in the high prices of essential goods and rectify anomalies in the GST. 
• RBI, in its monetary policy statement on Oct 4, reiterated the need for recapitalising banks.
• Currently 30,000 new youngsters are joining the job market every day, yet the government is creating only 500 jobs a day - Rahul Gandhi said, even as he admitted that the UPA government too faced the same challenge.
• India could have been sailing smoothly at 10% plus growth, but for the spate of disruptions, including demonetisation, GST, RERA and the new bankruptcy norms. Individually they may carry a broad range of benefits, together they have inflicted collateral damage much more than was anticipated.
• The real estate sector, which creates 1.5 million jobs, has been the worst hit. Home sales fell 26% in the Delhi-NCR in the first half of 2017 as demand nosedived post-demonetisation. Unsold inventory in the Delhi-NCR stood at 180,000 units and it will take developers four-and-a-half years to sell it.
• As many as 67 textile units are reported to have shut down across the country, rendering 17,600 people jobless.
• In Nov 2016 Larsen & Toubro sacked 14,000 employees, 11.2% of its workforce, as business slowed down and digitisation left many employees redundant. IT companies, including Tech Mahindra, Wipro and Cognizant, laid off tens of thousands of staff as global business grew tougher. HDFC Bank laid off 11,000 workers over three quarters citing digitisation. Yes Bank eliminated more than 10% of its workforce citing increased redundancy, poor performance and the impact of digitisation. Hiring intentions in corporates are 20 percentage points lower year-over-year. In the informal sector lakhs of workers go jobless as construction projects dry up given the unprecedented investment slowdown.
• Manufacturing was stuttering despite the government's high-decibel 'Make in India' campaign. Acquiring land for setting up manufacturing units continued to be tough. Private investment growth has been falling since 2012. The country still ranked a low 130th in the World Bank's ease of doing business rankings.
• India's job challenge is staggering, to put it mildly. The country needs to create 16 million jobs a year for the next 15 years to take advantage of its demographic dividend.
• In key areas like textiles, India has ceded its leadership to countries such as Bangladesh and Vietnam.
• Adding to the manufacturing woes is the implementation of new digital technologies like the internet of things, cloud computing and artificial intelligence in the manufacturing process, making traditional jobs obsolete. These technologies with a squeeze in services, are affecting IT jobs too.
• Sectors like construction, real estate, power, energy, infrastructure are destroying jobs. There has been a 30% decline in job creation since 2007-08 in these sectors.
• Short-term job creation looks near-impossible since we have been focusing on the wrong kind of manufacturing for 60 years, and are now paying the price.
• Bank credit has fallen by 50 per cent. New projects are not coming up as private investment is drying up. Focus on construction will also boost the steel and cement industry. Construction and infrastructure can boost economic activity and jobs substantially, but they have been marred by time and cost overruns. As critical as supporting giant projects is extending help to small entrepreneurs. 
• Recapitalisation of banks can also help them lend to businesses, given that bad loans to the extent of Rs 7.7 lakh crore have weakened their capacity to lend.
• IT is losing its sheen as a significant job provider, with markets such as the US becoming more protectionist. Technological advances are also rendering the work force obsolete at a faster clip. 
• This could be the right time to boost consumption through lowering interest rates or giving government subsidies to certain businesses.
• Reviving the informal sector remains the biggest challenge. It's impossible to gauge the extent of joblessness given paucity of data. There is simmering discontent waiting to explode that we must prevent. We must act now.
• The government has also increased budgetary allocations for anti-poverty programmes and rural employment generation schemes. The highest ever allocation under the MGNREGA was made during 2017-18. About 51.2 million households were provided employment during 2016-17.
• The larger debate continues to be over what India should focus on: manufacturing or services. Growth in the recent period has been driven by services, which in itself was owing to substantial inflows of foreign finance. India needs rapid manufacturing growth fueled by both export growth and expansion of the domestic market. 
• Today's joblessness is similar to that of late 1960's which prompted PM Indira Gandhi to amend Apprenticeship Act in 1973 to include training of graduate and diploma engineers as "Graduate" & "Technician" Apprentices and to mitigate their problem.
• Jobs will remain a thorn in this government's side which appears unsolvable and will have telling effect in 2019 elections. 

Good or bad aside, during UPA regime GDP growth benefited all, despite corruption and scams except 2008 global recession and 2013 economic dip. Modi riding the wave of anti incumbency and joblessness became PM in 2014 and instantly forgot his promises and commitments. He focused on foreign jaunts and blaming predecessor and did nothing for next two years. The advantage of low oil prices since 2013 was squandered away. Without even discussing with economic experts, he ventured on quack advised demonetisation and mangled GST roll out without adequate preparation and keeping away keys sectors out of GST and economy plunged into distress and millions jobs lost. Banks recapitalisation was given a miss and today banks do just retail banking only. In 2017 almost all economic parameters are worse than in 2013 and nothing much is likely to happen in next two years prior to 2019 elections. Modi & BJP are certain to pay price for their arrogance and incompetency. 

At-will employment

At-will employment means that an employer can terminate an employee at any time for any reason, or for no reason without incurring legal liability, as long as they don't discriminate in doing so. Likewise, an employee is free to leave a job at any time for any or no reason with no adverse legal consequences. 

As long as your employment isn't covered by a collective bargaining agreement, an individual employment contract or regulations that supersede Employment at Will, one could be fired at any moment, no matter how long he/she has held your job. Employment at Will sounds like a great deal for employers, but it's not. Employment at Will is a terrible thing for employers and their employees both.

1. It promotes "keep your boss happy" even if it is conflict with organization's interest.
2. It encourages employees to search for another job even when his problem could be resolved through frank and open communication.
3. Organization will get saddled with lousy managers, since lower rung employee's views never reaches the top.
4. It keeps employees focused on pleasing their direct supervisors and organization loses on breath taking ideas in trying new things by lower rung employees.
5. It kills the abilities of employees in collaboration, innovation and to try out new things. Employees can't be blamed for taking the safe route when their income is at stake.
6. It makes people shut up when they desperately want to speak that would benefit organization.
7. It gives supervisors and managers the idea that they are kings and queens in their little kingdoms. This idea promotes loyalty to a supervisor over idea-sharing, disruptive thinking or any other ambitious undertaking that squashes the potential of your team.
8. It disrupts the critical connection between employee and their passion for their work. That's harmful and expensive to your business. Employees are focused on guarding not to irritate their managers.
9. It keeps the organization mired in fear, lacking trust.
10. Managers & HR team uses Employment at Will as a cudgel against their employees.

Organizations can step out of Employment at Will simply by using a higher standard for employee discipline and termination. The more clearly and consistently organization shows to its employees that merely speaking up or having a different opinion from their boss will not get them in trouble, the more trust will grow in the organization. To lead through trust instead of fear, managers must be trained to coach and lead not to ride herd on their employees. Smart employers grab the best talent, pay them well and treat them well while on board.

The chief business of Americans is business

This is a trait in US, where people are well educated, well informed and have social security cover. The same has been copied by Indian IT industry and suits their policy deficits in their HR practices. During down turns lay offs are common these days without any kind of fair policy leading to heart burns among laid off employees at times doing their job well and way above in the merit order. Many times the laid off employees have family to support and repay bank loan EMIs and loss of job creates turbulence at home. Companies who resort to reckless layoffs will suffer loss of reputation and are avoided during recruitment drives. It helps a lot for companies to have policies and procedures that may be followed in different circumstances which goes long way avoiding troubles and safeguarding reputation.

IT in trouble, in India?

• The Indian IT industry’s worst fears seem to be coming true.
• H1B restrictions and automation resulted in uncertainty in Indian software industry apart from slow growth of global economy.
• Annual turn over IT in India is $150 billion (Rs. 975,000 crores). 78% clients from USA.
• The IT sector in India is generating 39 lakhs direct employments.
  (for every one direct IT job, there would be about three indirect employments)
• At least 1.8% of employees are likely to lose their jobs. It could go up to 5%.
• Hyderabad has 4 lakhs IT employees with supporting employees of 12 lakhs.
• 116 Big software companies exist in Hyderabad.
• The seven companies—Infosys, Wipro, Tech Mahindra, HCL Tech, Cognizant, DXC, and Cap Gemini —and which together employ 1.24 million people, plan to let go of 4.5% of their workforce, i.e. at least 56,000 employees, in 2017. 
• TCS, the largest IT employer with close to 390,000 employees, does not have any plans to ask anyone to leave this year.
• All seven companies are still in denial mode and attribute the planned exits to a “marginal” increase in the number of poor performers on account of a “more rigorous” performance evaluation process. 
• India's IT sector has about 1.4 million mid-rung employees, who typically have 8-12 years of experience and earn Rs 12 lakh to Rs 18 lakh a year. 
• Salaries at higher levels are in the range of Rs.24-36 lakhs per annum, in Hyderabad. Seniors with experience of 10-20 years are being targeted. 
• Roles that were typically assigned to employees with over 10 years of experience are now going to machines. 
• Hiring process for 2017 is likely to be slow with IT majors expected to cut down intake of engineers by 40%.
• In Hyderabad at least 1,000 seniors with designation of Group Project Manager, Project Manager & Senior Architect are being pressurized to opt for VRS.
• Infosys announced that they would add 10,000 jobs in USA. For every US job, they would have to lay off 4 employees in India. Its growth was 13.3% in 2015-16 has slid down to 8.3% in 2016-17.
• In Wipro 10% of 1.81 lakh employees may get laid off as soon as performance review gets completed. They may be replaced with freshers.  
• DXC is in the midst of a three-year plan to reduce the number of offices in the country from 50 to 26. The company plans to ask 5.9%, or 10,000, of its 170,000 employees to leave this year.
• Tech Mahindra is planning to lay off an estimated 1,500 employees across all levels. Spokesperson said the company “has a process of weeding out bottom performers every year and this year is no different”. 
• Tech Mahindra has suspended salary revision process for employees who have been with the company for more than six years, until there is a management review. 
• Cap Gemini is likely to terminate 5% of its 1.13 lakh workforce. They have issued notices to 200 in Mumbai office.
• IT solutions company Cognizant is expected to retrench over 10,000 employees in the country. Out of which 1,000 or more are likely from Hyderabad. 
• Cognizant has been under pressure from investors to shore up margins, boost profitability, deliver growth and return cash to shareholders. Last month, Cognizant reached an agreement with activist investor Elliott Management, which holds 4 per cent stake, to boost its operating margins from 19.5 per cent in 2016 to 22 per cent by 2019 by streamlining costs, improving operational efficiency and aggressively employing automation to optimize traditional services.
• Cognizant recently announced a voluntary separation package for its employees. 
• Cognizant is asking employees (which includes Associate Director, Director, Vice President and even board members as well) to retire voluntarily, those who are grossing more than 40 lakhs with 9 months salary.
• Cap Gemini India CEO says 65% of IT employees are just not re-trainable. Probably, India will witness the largest unemployment in the middle level to senior level. Most IT employees come from low-grade engineering colleges.
• Nasscom says there is a need to re-train up to 1.5 million, or nearly half of its sectoral workforce. 
• Poor growth and pressure on profitability has prompted most companies to save on costs.
• The layoffs reflects their under-preparedness in adapting to newer technologies and dealing with the fallout from Trump’s protectionist policies.

The rise of protectionist politics in advanced economies has increased the pressure on companies there to outsource contracts to local companies, instead of firms in India. This is making growth prospect more difficult for Indian IT companies. But with a president as unpredictable as Trump at the helm of affairs, the fear is that things can get more serious over time. 

In the past, companies never facilitated nor encouraged employees to upgrade their skills, nor adapted modern technologies but continued with obsolete ones as a strategy to maintain attrition at minimum. Ridiculous as it seems, that the whining Indian IT jobs, once the most coveted in the country, are no longer secure and that morale in the sector is at a low.  The leaders are meeting clients, so they know about the change in (their) thinking. The bottom most guys adopt easier and learn. It is therefore, this middle management that is most difficult to change. The reality is that mid level managers never touches the outside world. Imagine someone with eight years of experience in something like manual testing with job going away due to automation and having a home loan or a child at a private school. There is huge human cost to this change and it will hit us hard. 

The bad news is that the worst is yet to come. 

My View:
Brexit marks globalization's biggest reversal since the end of WWII. Such a secular shift impacted growth, corporate profits and asset prices. It adds to the conditions for slowdown in global growth and increased the chances of further shocks. Three legs of globalization: immigration, trade and capital mobility are under varying degrees of duress. Global exports of goods & services are falling, global inter-bank lending retreating with growing political risks. Globalization has enabled rich becoming much richer, upper middle class becoming richer leaving majority lower middle class and poor remain unchanged. Societies have been vertically divided between have's and have not's. The vulgar and disproportionate utilization and display of resources by upper classes has become point of heart burn for majority lower classes giving rise to protectionism and nationalism exemplified by Trump's winning. Reversing these trends is no easy task. Indian IT sector growing on 100% export model carries unknown and uncontrollable overseas risks with no means of mitigation. Instead of 15-20% annualized growth if it contracts by just 5%, its existence comes under threat. Its devastating effects impacts one and all. Now the decision of exempting IT sector from stringent labour laws by granting them hire & fire powers at will, will come under scrutiny. Instead of feeling helpless we must change our economic growth model reducing global risk exposure to minimum, exploit our strengths and keep going carrying all sections of society together. Avoid comparison with China etc and endeavor should be to improve ourselves over previous year by at least 5%, if not more.