Concerned over more and more corporates resorting to job cuts to deal with the difficult economic environment, Commerce and Industry Minister Kamal Nath has asked India Inc not to boost profits by resorting to firing staff.
Within a week of Prime Minister Manmohan Singh speaking his mind to the industry captains, Nath said, "Employees on the roll must be retained."
The minister was asked, in the programme Devil's Advocate on CNN-IBN, whether he was telling the industry, "Don't try and boost your profits by cutting people at this moment, live with smaller profits, but retain the people you have?" To this, Nath replied ,"Absolutely, I am saying that."
He did not agree that IT firms like Wipro, Infosys Technologies and Satyam Computer Services could come under pressure to lay off people. However, fresh creation of jobs may be impacted.
"Maybe, they are not going to create the same number of jobs they have been creating... Yes, growth in employment generation will be affected," he said.
Amid fears of global economic crisis spilling over to India, Singh had asked the industry leaders to refrain from large-scale layoffs.
"While every effort needs to be made to cut cost and raise productivity, I hope there will be no knee-jerk reaction such as large-scale layoffs, which may lead to a negative spiral," the Prime Minister had said in his interaction with the corporate honchos on November 3.
Reports suggest firms in the automobile, steel and real estate sectors are resorting to lay-offs in the midst of slump in demand.
Nath said the government would have to pump in Rs 25,000 crore in the next six months into the economy without creating an adverse impact on the fiscal deficit.