#BudgetImpact: Finance minister Jaitley's plan will create jobs at bottom of pyramid, say experts

In Budget 2016, Finance Minister Arun Jaitley has focused on job creation that will be possible on account of the various schemes announced by the government such as Make in India, Skill India, Digital India, besides the boost to manufacturing sector with lower tax slabs for new manufacturing companies, incentives for housing sector, and the Kisan Kalyan cess aimed at the rural sector.

Who will benefit from this job creation? Industry experts say that it is the bottom of the pyramid – school dropouts, matriculates and higher secondary pass or fail candidates who will benefit from the government’s plan for job creation.

While 2015 has been high on hiring vis-à-vis the past years, 2016 is anticipated to deliver the returns of the various reforms proposed by the government.  The push on Make in India and the plan to create 100 smart cities is expected to increase hiring in manufacturing and commerce as well as in the infrastructure sector. As a result of which, tier-II cities are expected to be among the largest contributors as far as employment creation is concerned.

The job market opened up in 2014 with an average 17 percent rise in demand, according to Monster India’s (www.monsterindia.com) recently released whitepaper that has analysed online hiring activity data of five years across key sectors – information technology, BFSI, production and manufacturing. These sectors continue to look bullish for the coming year. Emerging sectors such as e-commerce and internet-related are expected to create the most number of employment opportunities, according to the study.

The start-up sector has driven job opportunities at entry-level jobs to matriculates and freshers, and experienced people in key select areas.

Freshers vs experienced employees

Aasaan Jobs, a two year-old online market place for entry level and grey collar job seekers at a salary below Rs 30,000 per month, has seen increased job market opportunities in field jobs such as logistics, sales and marketing, payment gateways and healthcare start-ups. Candidates sought are fresh graduates with no special work skills. Freshers from tech colleges too fall under this category as they are not industry-ready, says Siddharth Gupta, Head, New Products, AasaanJobs.

Candidates at entry level jobs are largely in the 18-36 year age group and are absorbed in jobs on a contract basis. The demand in this category is for field staff for data collection, sales executives, delivery boys and the like. Start-ups largely outsource jobs to job portals such as Aasaan Jobs that employ people on their payroll and are in turn paid for by the start-ups.

Candidates with 0-2 years of experience are usually paid Rs 14,000-Rs 16,000 per month and those in the Rs 9,000-Rs 12,000 salary package supplement their earnings with incentives that they receive in sales and marketing. However, those who can be employed for data and analytical work on the back of professional qualifications can earn up to Rs 19,000 per month.

The job market in the start-up sector opened up exponentially when funding made it easier to hire candidates. It also led to a curious case of employees leaving blue chip companies to join start-ups to be part of a new job revolution that was created to provide solutions to existing problems in society. Hence, start-ups mushroomed specialising on a particular solution be it curating food orders, giving information on discounts and deals, booking movie tickets, offering services for handyman jobs, etc.

Experienced candidates are also employed as permanent hires in start-ups. TeamLease Services, a human resource services firm set up in 2000, gets 75 per cent of requests for candidates from start-ups. “These start-ups follow existing norms of employment like giving notice to employee before terminating contract, payment of a month’s notice to employees, etc.,” says Sudeep Sen, Assistant Vice President, TeamLease Services.

Candidates with 2-5 year work experience are hired on contract basis in the range of Rs 20,000-Rs 25,000 per month in the IT/ ITEs/ healthcare, pharma/ e-commerce sector while niche jobs like that of a CTO can fetch annual salaries of Rs 45-50 lakhs, too in the start-up sector. Many candidates joined start-ups at 100 percent hikes in salaries during the start-up boom period in the country in the past decade.

Old economy beckons

Year 2015 saw as many as 15 start-ups that shut shop.  Many were forced to trim its workforce owing to multiple reasons such as lack of demand for their services and offerings, high logistic costs, last mile delivery problems, the discount and deal culture and high advertising spends.

“When a number of start-ups were forced to shut shop due to drying up of investor funds, employees lost their jobs and this in turn dampened potential candidates enthusiasm to join start-ups,” says Kris Lakshmikanth, Chairman and MD, Head Hunters India, Bangalore, that focuses on executive level hiring for large and mid-sized firms.

Salaries have become more realistic, says Lakshmikanth. “When we were recruiting recently for a company in the old economy, we interviewed a candidate who had worked for a couple of years in an established firm, left it to joined a start-up at 100 per cent hike in salary and later when the start-up was not doing well wanted to move back to the old economy. However, the new recruiter was only willing to give 10-15 percent hike of his first job,” says Lakshmikanth. There is a course correction now with established firms that are coming in the online space who are unwilling to give huge salaries like start-ups did in the initial phase.

With key personnel shifts in start-ups like Flipkart with Binny Bansal in charge, for instance, more exits can be expected. However, salaries will not be extravagant as earlier, says Lakshmikanth.

Jaitley’s vision

A large number of youth in the country are unable to get jobs due to lack of job-ready skills. Organizations are cutting down on staff and thrusting more responsibilities on existing employees, eliminating the need to hire more people. A number of jobs have been lost due to automation in organisations. This trend will continue according to international studies which predict that over 40 percent of jobs will be lost to technological innovations, robots and automation.

Finance Minister Jaitley’s 2016 budget that focuses on investing in skilling centres, infrastructure and the rural sector may provide the key to large-scale unemployment in the country, say experts. “A functional knowledge of the English language accompanied with skills required for the job will see more youth getting jobs in the country,” they say.