Article: Rewind 2019: Some cases of major job losses in India

Talent Management

Rewind 2019: Some cases of major job losses in India

Job cuts at major companies like Maruti Suzuki and Parle, BSNL-MTNL’s VRS scheme, and Jet Airways shutting down and leaving several jobless. As we come closer to the end of this eventful year, let’s take a look at some of the major layoffs and job cuts in India.
Rewind 2019: Some cases of major job losses in India

Every year many companies across industries undergo restructuring. Over the years, owing to the rapid pace of change, the frequency of such restructuring processes has increased. Automation, changing consumer demands and preferences and shift in business models have urged many companies to let go of several employees. But is it just us, or you also agree that this year, these job cuts seemed to be quite a trend across industries? 

Major airline Jet Airways shut down, loss-making telecom PSUs BSNL and MTNL consolidated their business, and the entire automotive sector suffered from the impact of low consumer demand. All these business failures led to job losses for many. As we come closer to this eventful year, let’s take a look at some of the major layoffs and job cuts in India. 

The struggles of automotive sector: Lakh of people left jobless

The automobile sector in India faced one of its biggest slumps this year. In August, it was reported that approximately two lakh jobs were cut across automobile dealerships in India in the last three months as vehicle retailers took to reducing manpower to tide over the impact of the sales slump, as per the industry body, the Federation of Automobile Dealers Associations (FADA).

As per Society of Indian Automobile Manufacturers (SIAM) figures, vehicle wholesale across all categories declined by 12.35 percent to 60,85,406 units in April-June as compared to 69,42,742 units in the same period of last year. Meanwhile, as per data based on registrations collated by FADA, automobile retail sales in the April-June period declined by 6 percent to 51,16,718 units in the first quarter of this fiscal as against 54,42,317 units in the year-ago period.

The auto industry’s slowdown led Indian automobile major Maruti Suzuki cut down its temporary workforce. It came down to 18,845, on average during the six months ended June 30, down 6 percent, or 1,181 people, from the same period last year. These job cuts accelerated since April. 

Layoff of mid-to-senior employees at Cognizant 

The restructuring Cognizant is going to lead to a net reduction of approximately 5,000 to 7,000 roles which amounts to about 2 percent of the company’s total population. Further, as a part of recent developments, the company is exiting its content moderation business for clients such as social media giant Facebook. The company has come in a significant scrutiny for the working environment of the moderators and the impact of the work on their mental health. The step will further impact 6,000 roles worldwide.

The tremors of slow economic growth hit 10,000 jobs at Parle

Parle Products Pvt Ltd, one of the largest biscuit makers in India, also went through a rough phase in 2019. The company announced its plan to cut 10,000 jobs across the functions amid the slowing economic growth and falling demand in the rural parts of the country. The ninety-year-old company experienced sharp dip in its iconic biscuit’s sales, which meant the company may have to slash production, resulting  in layoffs of 8,000-10,000 people. 

BSNL-MTNL merger: Job cuts masked behind Voluntary Retirement Scheme

BSNL and MTNL ailed through high loss this year. In fact, BSNL, which was once a Navatna company, accumulated losses of more than Rs.90, 000 crore. Reportedly, this is the consequence of BSNL's inability to compete with nimble and more efficient private players like Reliance Jio and Bharti Airtel. 

According to various market experts, the cause of BSNL and MTNL loss can be contributed to employees with who have resisted change during the disruptive times in the telecom industry.

“The biggest issue with both BSNL and MTNL, is the employees belonging to the ‘monopoly’ era. It is difficult to change the mindset to suit today’s ultra-competitive environment; that has been one of the major reasons for their decline,” independent market expert Ambareesh Baliga was quoted in media. 

To pull back both telecoms from losses, the decision to merge them and trim the workforce was hence made. The government came up with a four step revival plan which included offering employees of both the subsidiaries a Voluntary Retirement Scheme (VRS). As per the plan, any employee above the age of 53 and half, who opts for the VRS, will be given 125 percent remuneration of the salary, pension and gratuity till the age of 60. 

Out of 1.50 lakh total employees at BSNL, 57,000 have already taken it. Further, with BSNL's internal target for VRS is pegged at 77,000 employees, the staff strength is expected to come down by half.

These job cuts might help the telecoms with savings and costs, however, for long-term and sustainable growth, it has to look for better ways to drive business. The focus, hence, now has to be on not letting the job cuts affect its services.

Tata Motors: The latest to turn to Voluntary Retirement Scheme

As per a latest report, “This year, Tata Motors’ employee cost-cutting plans are more aggressive than the previous times. Similar to the trend of 2019. It is no news that the automotive sector has been most negatively impacted sector this year. While the entire economy faced a slowdown, for the auto sector, especially, the year has not been great. 

Besides removing surplus staff at JLR in recent months, Tata Motors is, therefore, now seeking voluntary retirements from more than 1,600 people across all locations and hierarchies. The scheme will be offered to employees of different departments, across its businesses of passenger and commercial vehicles, said one of the four people cited above, requesting anonymity.

Jet Airways: A great loss

In April, this year, Jet Airways flew its last flight—S2 3502, from Amritsar to Mumbai, as it ran out of cash and lenders declined to pump in more funds to keep the airline running. With that last flight, the hopes of over 16,000 employees hung in the balance as their jobs vanished in thin air.

While many had sensed the decline of the airline and moved to other companies, there were many others who were not able to let go off their years of attachment with the airline. By April, about 400 pilots had already moved to other airlines. About 40 engineers had also left the airline. In addition, Air India had almost completed hiring 150 cabin crew members from Jet Airways for its international operations. But then there were 800 members of the All India Jet Airways Technicians Association have written an open letter saying that they will not let the airline go down. 

Later, many other airlines including Indigo, Spicejet and Air India came to rescue and hired employees from Jet Airways. But the question is how many were able to get through these massive job losses across industries? How many were able to find another job or opportunity for them to sustain their career?

If not anything else, this year was a lesson for both businesses and the workforce on how unpredictable the world of work has indeed become. Building and nurturing transferable skills has hence become the need of the hour and the sooner we all realize it, the better it will be for us. Investing in continuous learning is no longer a luxury, it is a necessity and it is time that businesses make that investment. The workforce also harness their adversity quotient most of all the other behavioural skills like curiosity, drive to learn and creativity. Additionally, the industries and the government have to partner to ensure that the state of the economy gets better and so does the state of the job market. 

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Topics: Talent Management, #Rewind2019, #Layoffs

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