India Inc is among the most pessimistic on jobs globally

Globally, Indian firms are among the most downbeat on employment outlook, according to the latest IHS Markit India Business Outlook tri-annual survey conducted in February, June and October. A few Indian companies plan to hire additional staff in line with an expected recovery in economic conditions, according to the report of the latest survey published on 10 November. However, confidence was restricted by uncertainty surrounding covid-19 and labour shortages, it said.

Consequently, the composite employment net balance remained negative in October (-2%) despite rising from June (-23%). The net balance is calculated by deducting the percentage number of survey respondents expecting a deterioration in employment over the next 12 months from the percentage number of survey respondents expecting an improvement.

Further, pessimism regarding jobs was centred on the service sector, where a net balance of -7% of businesses foresee job shedding. Goods producers, however, predicted jobs growth, with the net balance up from -18% to +9%, it said.

According to IHS Markit’s Global Business Outlook survey report, companies turned optimistic on future hiring as firms replace staff laid off at the peak of the pandemic. However, hiring intentions remained among the lowest on record. A net boost to jobs was expected in the US, Japan, Germany, Ireland and the UK, but job shedding was signalled in Italy, France and Spain. Across emerging markets, staff numbers look set to rise in Brazil, China and Russia, while Indian firms expect to cut employment, said the report.

Optimism for capex among Indian companies was the strongest among all nations for which comparable data are available. “Business sentiment in India improved considerably from the lows seen in June, as the loosening of curbs and predictions of a vaccine boosted confidence in October. All measures increased during the latest survey period, though pessimism was still seen for employment,” said Pollyanna De Lima, economics associate director at IHS Markit.

“The results do bring a note of caution. Levels of confidence remain historically low as a number of firms were worried any spike in covid cases could harm growth prospects, while job shedding is still predicted for the year,” she said.