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 Corporate India likely to cut 25% job cuts post Diwali: ASSOCHAM

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PostSubject: Corporate India likely to cut 25% job cuts post Diwali: ASSOCHAM   Fri Oct 31, 2008 9:20 am

Corporate India likely to cut 25% job cuts post Diwali: ASSOCHAM



These sectors comprise Steel, Cement, ITeS/BPO, Financial and Brokerage Services, Construction, Real Estate and Aviation to begin with as their promoters are no longer in a position to sustain their operations with existing manpower strength, adds the ASSOCHAM Analysis on `Jobs Scenario Post-Diwali’

Though prevailing economic negativity largely dampened 08 Diwali’s enthusiasm as it’s distribution suffered heavily but much more serious and alarming situation is emerging Post Diwali under which corporate India is likely to announce lay off of its nearly 25% work force in next 10 days in 7 key industrial segments, says the ASSOCHAM analysis.

These sectors comprise Steel, Cement, ITeS/BPO, Financial and Brokerage Services, Construction, Real Estate and Aviation to begin with as their promoters are no longer in a position to sustain their operations with existing manpower strength, adds the ASSOCHAM Analysis on `Jobs Scenario Post-Diwali’ which is based on its direct interaction with player’s concerned in identified sectors.

Releasing the ASSOCHAM analysis here today, its President, Sajjan Jindal said that HR heads of majority of Steel, Cement, ITeS/BPO, Financial and Brokerage Services including Construction, Real Estate and Aviation have drawn up conclusive plans to curtail their workforce by 25 to 30%, announcements for which is likely in next 10 days or so.

As a matter of fact, most of the corporates had desired to start lay offs in a phased manner much before Diwali of 08 but these were advised to defer their restructuring after Diwali on human ground reasons.

Quoting findings of ASSOCHAM analysis, its Chief emphasized that although curtailing workforce for any management is an extremely painful decision but employers have no other alternatives as part of their corporate strategy to cope with prevailing negativity for sustaining their operations with squeezed margins after drastic cost cutting measures that majority of Indian Inc. had already taken much before Diwali.

“These included denial of bonus and ex-gratia, other incentives to reward performance and even gift distribution which Indian industry did not find sufficient and that is why its next step is to cautiously reduce their employees strength in numbers”, said Jindal.

Third alternative as is being devised and worked out by CEOs who run their businesses in aforesaid segments of Indian industry would be to curtail perks and perquisites of middle and senior management levels as slowdown will continue and businesses would have to stay on as most of CEOs have also agreed to accept substantial slashing in their packages.

Justifying the lay offs, the Chamber analysis further points out that majority of non-performing working force with little productivity, punctuality and efficiency is in the know that axe is going to fall on them in view of current economic negativity and therefore corporates are not anticipating any resistance in executing their conclusive restructuring and downsizing measures.

It further highlights that Pre-Diwali shopping spree in 2008 was reduced by all standards as majority of buyers at recruiting age group have applied restrain on them, for they knew the moods of employer because hiring would almost stop post-Diwali as slowdown and negative sentiments would persist for sometime before Indian economy returns on growth momentum.

The Chamber holds that placement agencies in the meanwhile have already deferred their plans as well known business houses in crisis ridden sectors have stopped requisitioning about their human resource requirement to them in view of current meltdown and job seekers are well aware of this factor which has created confidence crisis in most of them.

The assessment suggests that negative sentiments in the 7 sectors could be turned into opportunity provided the Reserve Bank of India discontinues with its tight monetary policy and decreases the interest rates by at least 3%.
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