Corporates cutting jobs to save costs

Faced with a tough economic scenario, corporates are cutting jobs and rationalising manpower to save on costs and the situation is likely to get worse in coming days, according to an Assocham study.

“Alongwith the increasing number of corporates rushing to banks for debt restructuring, scores of them are also being forced to go in for manpower rationalising, reducing the headcount to save costs which they are unable to bear in the face of a difficult economic environment,” according to the Assocham report on on Impact of Slowdown on Employment.

The sad part is the situation is likely to become worse, rather than improve, in the weeks to come and the pain would only increase, it said.

The companies resorting to rationalisation of manpower belong to sectors like infrastructure, gems and jewellery, educational solutions, realty, non-banking finance companies, especially in the gold-loan segment, media and public relations.

“More and more companies are approaching the consulting firms seeking solutions to cut costs so that they can weather the difficult economic environment vitiated by adverse global situation, pressure on currency, sinking stock market, high interest rates, inflation and limited elbow available with the government to bail out the troubled industry,” it said.

The report further pointed out that if the situation does not improve in the near future, the negative fallout would be felt on those sectors as well which are driven by job markets like consumer goods, white goods, electronic gadgets and passenger cars.

Moreover, eroding consumer confidence would also affect tourism and its constituents like hotels, restaurants and tour operating. The aviation sector would also face tougher times, the report suggests.

However, the sectors which are still doing well include agri-related companies in implements, tractors, fertiliser, seeds, extension services and the rural product focussed FMCG.

Current Account Deficit, which indicates imports of goods services and transfer are higher than their exports, touched 4.8 per cent (or USD 88.2 billion) of country’s Gross Domestic Product (GDP) in 2012-13 period.

Meanwhile, after heavy battering, the rupee, stocks and bonds today showed some signs of a fightback with RBI intervening in the market with massive selling of dollars as the domestic currency breached the 64-mark today.

Also for the first time ever, the rupee slipped below the 100-mark against the British pound today.