Saumya Bhattacharya| ET Bureau | Dec 30, 2016, 09.54 AM IST Mumbai
Demonetisation has single-handedly put the brakes on the jobs market, which was moving steadily through the year with only a few dull pockets. We aren’t in the midst of a job freeze just yet, although hiring will decisively slow down, at least in January-March. Some sectors continue to be exceptions but for now, there are more laggards in the jobs market than at any other time in the last couple of years.
The silver lining is that most headhunters, placement companies and jobs market experts ET spoke to said this is likely to be a mini-slowdown and that things will look up after the next two quarters. In the new quarter, though, hiring decisions will get deferred. "Uncertainty is not good for any economy. Demonetisation disrupted the jobs market at a time when it was turning positive after a short lull. In 2017, the new GST regime is going to be another disrupter," said K Sudarshan, managing partner for India, EMA Partners International.
Headhunting and placement firms are already facing the repercussions. "It used to take about eight weeks to complete the decision-making process but now that cycle has gone up to almost 16 weeks. Momentum has slowed down," said Sunil Goel, managing director, Global Hunt. Goel expects hiring numbers to pick up in another three to six months.
Jobs market watchers expect uncertainty to clear in the next quarter. "Risk aversion is high for companies and candidates. So far, hiring is mainly for replacement and on need basis. But we see this scenario changing for the better in the next few months," said Uday Chawla, managing partner, Transearch India.
On the salary increment front, the year, in all probability, will end on a sour note. In the Willis Towers Watson Salary Budget Planning report in October, salary increase for India Inc employees for 2017 was projected at 10%, the same as actual increase in 2016 and the highest among developed and emerging markets in Asia Pacific.
However, this is bound to worsen post-demonetisation. "Demonetisation has had a crippling effect. Salary increments are likely to be in single digits this year and justifiably so, as companies are not sure how to plan compensation budgets now," said Anandorup Ghose, partner, Aon Hewitt.
At India’s top engineering schools, the Indian Institutes of Technology (IITs), there were fewer recruiters in 2016 than a year ago. The sheer strength of the IIT brand tends to keep the institutes insulated from the outside environment, but this year, they felt the impact as well. At the end of the first phase of placements, most IITs had similar — or in some cases, more —offers than a year ago, but it took a larger number of companies to make them, compared to previous years.
International offers were down, along with the number of offers per individual recruiter. The ESOP component was slashed by overseas recruiters, showing the shift had been made to a market where employers were calling the shots. Startups and PSUs provided some relief.
For now, hiring will be in wait-and-watch mode for most sectors even as India’s digital payment, e-wallets and fintech companies are scurrying to get the right talent in place. Till the time the uncertainty around demonetisation persists, it will be an employers’ job market.