India reported a record exports growth of 82% in July. The information technology sector is adding 225,000 jobs this year.
Wait. There is an economic slowdown. The devil of India's growth story is in the details, it seems –and it seems the surge in jobs may not be the real thing in the broader economy.
Slow manufacturing hurts corporate profits at India's 160,000-odd factories, employing about 110 million people. Jobs could in turn be a casualty.
In a thin-ice scenario, a slowdown could mean job losses or slower hiring. The key fact is that the export sector is where the jobs are. And with Western economies including the US and European Union nations, reeling under a crisis, the export boom may well peter out, and with that, jobs may suffer, say analysts.Employment prospects in small and medium enterprises peppered across the country that export products as diverse as handicrafts, gems and jewellery, garments and apparel could be the worst hit.
"Export is the most important and effected part of the slower manufacturing growth. Global cues add to the trouble and may pose the low tide much jerky. Moreover, the bleak global demand scenario and worrying local inflation figures tell us to be cautious. I think it should be a wait and watch strategy now," said Manish Sabharwal, chairman of TeamLease, which supplies temporary staff to sectors such as retail and telecoms.
Small enterprises are themselves not confident about future business prospects in the coming months.
"There has been a dramatic decline in sentiments of small enterprises in credit cost and credit availability for capacity expansion," said a recent survey by the Confederation of Indian Industry (CII).
"Hiring is really slow. Nobody is expanding and hiring. And SMEs are the most worried people. It's tough to guess that what should be the step ahead," Pramod Thilakan, associate director of Executive Recruiters Association (ERA).
For the moment, IT is on track, despite talk of a double-dip recession in the US, its main market. IT and IT-enabled service sectors have seen momentum in hiring activity moving up by 12% in June 2011 over the previous month, according to recruitment portal Naukri.com
"While it is possible that the slowdown in economic activity may lead to a lower pace of hiring, supply side issues (shortage of skilled people) are more structural and therefore short-lived. Thus economic slowdown may not necessarily affect the pace of hiring," said Hitesh Oberoi, Managing Director and CEO, Info Edge India, which runs Naukri.com.
While there is no immediate data to signal that jobs are under threat in the sectors that employ most workers, the mood is certainly one of caution.