Employment Growth In Corporate Sector Slows To 1.5% In FY24: Report

The report attributed this slowdown to the fact that FY23 was the first year after the pandemic, during which there was significant voluntary and involuntary staff turnover

The growth in corporate sector employment fell 1.5 per cent in FY24, down from 5.7 per cent in FY23. The latest report from the Bank of Baroda, released on Wednesday, indicates that only 90,840 new jobs were created in FY24, compared to 333,000 new jobs in FY23.

“The employment growth scene in India Inc. was quite lacklustre when looked at the aggregate level. Higher growth in FY23, due to the base effect, can only partly explain this low growth,” the report states.

The report attributed this slowdown to the fact that FY23 was the first year after the pandemic, during which there was significant voluntary and involuntary staff turnover. This situation contributed to increased employment growth as companies scaled up activities.

“The same necessity was not felt in FY24, resulting in a lower growth rate,” it added.

The report highlighted that the retailing sector (19.4 per cent) and trading sector (16.2 per cent) led job creation, followed by infrastructure (15.8 per cent), real estate (13.6 per cent), and iron and steel (12.1 per cent) leading the hiring process. Conversely, sectors such as hospitality (-11.9 per cent), logistics (-11.8 per cent), business services (-6.3 per cent), and textiles (-5 per cent) experienced declines in employment during the year.

To determine if there is a connection between job creation rates and sales figures for the year, the report compared the two and found no clear correlation between employment growth and sales performance in FY24.

In the trading sector, employment increased despite a decline in sales. A similar trend was observed in the plastic products sector to some extent. Conversely, sales showed growth for industries such as hospitality, business services, and electricals, where employment decreased.

“Therefore, future prospects may not necessarily be linked to growth in sales and would vary across industries as well as individual companies,” the report noted.

The report compiled employment data from a sample of 1,196 companies, which had a combined net sales of Rs 99.3 trillion in FY24. Employment information is typically reported in companies' annual reports, so this sample reflects the available data. Notably, the sample consists exclusively of large to medium-sized companies and does not include micro and small enterprises.

“A limitation to using these numbers is that the quantum of outsourcing is missed, as companies report only permanent staff on their rolls. Several industries use ‘outsourced staff’ for functions like sales, where remuneration is performance-based,” the report said.