Impact of economic slowdown on

employment in INDIA
 Ripples of recession leading to reduction in exports to developed
countries are being felt by all the developing countries. Credit availability and its cost
have become major areas of concern. The combined impact of all these factors
would be loss of employment and reduction of income leading to social distress. The
International Monetary Fund (IMF) placed the estimated world output growth at 3.75
per cent in the year 2008 and 2.2 percent in the year 2009 in World Economic
Outlook (WEO), November 2008, which represented a significant slide from a level
of about 5.0 per cent in the year 2007.

 The global situation deteriorated rapidly after mid September,

2008 following the collapse of Lehman Brothers, one of the top five investment
banks in the US, the collapse of American International Group (AIG) Bank and
also of the mortgage lenders Freddie Mae and Fannie Mae. There has been a
massive choking of credit since then and a global crash in the stock markets.

 The deepening of the global crisis and subsequent deleveraging

and risk aversion in the global markets affected the Indian equity and the
foreign exchange markets. While the Indian economy has a sufficient internal
ballast to withstand the impact of global recession because of overall strength
of domestic demand and the predominantly domestic nature of financing of
investment and exposure of exports to less than 20% of GDP, nevertheless
some slowdown is inevitable.

It may be observed from Table 1 that the total estimated employment in all the sectors covered
by the survey went down from 16.2 million during September, 2008 to 15.7 million during
December, 2008 resulting in job loss of about half a million. It is seen that the employment
declined every month during this period. It has also been observed that the employment in all
the sectors/industries studied went up significantly over the period from March, 08 to
September, 2008. Beyond September, 2008, it has however, decelerated at all
industries/sectors level at an average rate of 1.01 per cent per month.

Trends in Average Employment

Period
Average Employment in
Percentage
(millions)
change
September, 08
16.2
October,08
16.0
-1.21
November,08
15.9
-0.74
December,08
15.7
-1.12
Average Monthly change
-1.01

Source :Government of India, Ministry of Labour & Employment

Labour Bureau, Chandigarh.

From the above data it is observed that the management people

and employees may experience anxiety around a number of issues during
an economic crisis or downturn.
The monthly average rate of employment loss during Oct- Dec, 2008 was 1.01 per cent
whereas in January, 2009 the rate of decline has increased to 1.17 per cent. The increase in
rate of change is mainly due to the decline in employment in IT/BPO sector in January, 2009 in
contrast to the increase in employment during Oct-Dec, 2008 and also higher rate of
unemployment in Automobile Sector. The month wise employment trends are presented in
Table1.2.

The economic slowdown is expected to adversely impact the quality of employment

besides the quantity reflected by decline in employment. The quality aspect is measured in
terms of decrease in average wages received by the
employees. Hence information is also collected on the total 12 earnings of workers. The results
of the survey reveal that the average monthly wages have also declined by 0.26 per cent in
January 2009. The average monthly decline during Oct-Dec, 2008 was 3.45 per cent. During
the current survey the average monthly wages for direct and contract workers are also
collected. The findings of the survey reveal that average monthly decline in the wages are 0.25
per cent for
direct category of workers and 0.63 per cent for contract workers in
January, 2009. The information is presented in Table 1.3.

SR.No.
Period
Percentage
Change
1
October, 2008
1.74
2
November, 2008
-11.43
3
December, 2008
-0.5
4
January, 2009
-0.26
Source :Government of India, Ministry of Labour & Employment
Labour Bureau
Chandigarh

It needs to be noted that the rate of decline in employment in January, 2009 is

higher than average monthly rate of the previous quarter, whereas the total loss of
employment estimated is less than the previous monthly estimates.
In this recession period HR play an important role to make the industry sustain
and the entire economy flourish. This paper expresses the challenges of human
resource management in the global recession situation. The role of the Human
Resource
Manager is evolving with the change in competitive market environment and the
realization that Human Resource Management must play a more strategic role in the
success of an organization.
The most important challenge in recession period that is revolutionizing the
Human Resource systems to identify, maintains, develop and utilize talents across the
organization to their fullest capacities. The management of Human Resources has now
assumed
strategic importance in the achievement of organizational growth
and excellence. As globalization advances and we move into the information
age, organizations need to adapt to the changes in technology and the
changing issues in management of people.

The emerging challenges of HumanResource

Management in the times global recession.
The role of the Human Resource Manager is evolving with the change in
competitive market environment and the realization that Human Resource Management
must play a more strategic role in the success of an organization. Organizations that do
not put their emphasis on attracting and retaining talents may find themselves in dire
consequences, as their competitors may be outplaying them in the strategic
employment of their human resources.
With the increase in competition, locally or globally, organizations must become
more adaptable, resilient, agile, and customer-focused to succeed. And within this
change in environment, the HR professional has to evolve to become a strategic
partner, an employee sponsor or advocate, and a change mentor within the
organization. In order to succeed, HR must be a business driven function with a
thorough understanding of the organization’s big picture and be able to influence key
decisions and policies. In general, the focus of today’s HR Manager is on strategic
personnel retention and talents development. HR professionals will be coaches,
counselors, mentors, and succession planners to help motivate organization’s members
and their loyalty. The HR manager will also promote and fight for values, ethics, beliefs,
and spirituality within their organizations, especially in the management of workplace
diversity.

These paper discusses few important challenges of HRM due to

recession and i.e…

1.Problem of Recruitment.
2.Managing downsizing program appropriately.
3.Talent management.
4.Stress Management.
5. The Return on Recognition in a Recession.

1.Recruitment and Recession .

Recruitment industry is going through a tough time at this moment, the numbers have dropped
drastically for the biggies and even recruitment agencies are battling for survival. Synergy
Solutions provides recruitment services to companies in India and in US, the biggest challenge
today is to find newer and better ways to add value to the clients. There is a need to find
innovative ways to improve recruitment ROI for the client.

First things first, the base idea is not to wait and find ways to weather the storm but
to take proactive measures to tide the wave. The world is changing very quickly to
combat recession and it’s about time we translate our thinking into action or else we will
be late. The main reason being the companies who are hiring have recently made
drastic cuts in their recruiting budget and are in the process of streamlining their side of
the story.
Companies (clients) has to demand greater accountability from recruitment agencies
and focus on improving their recruitment ROI. Recruitment agencies / staffing
companies who are agile in their operation and can quickly adapt to the changing
environment will emerge victorious at the end of this recessionary period.

Few areas where placement agencies should focus:

Closely monitoring the way each industry is changing in
current times and the way companies within the industries are
changing their hiring strategy.
 Build stronger relationship with clients thereby working closely
with your contact points in the company to get clarity on their internal hiring plans and
prepare accordingly. This will also help protect your share in the pie from your
competitors.
 Clients will use this recession to re-negotiating the recruitment
contracts with recruitment agencies. Since numbers are falling every day recruitment
agencies will be concerned about their cash flow situation and as a result will have no
option but to be forced to negotiate their existing contract. New client would want to start
the relation on the terms advantageous to them, that means lower rates and tougher
terms.
 Look out for companies who are brave and would consider
recession as the right time to recruit good quality talent at the right price. These are
usually multinationals with deep pockets and would want to drive competitive advantage
home. Be smart to attack these companies.
 Train your recruiters to be tactically smart and agile in their
actions. During the boom there were a lot of open positions and even more candidates
available so the match making activity was comparatively easy and largely govern by
the good sentiments in the market. During tougher times recruiters need to be smart
and get themselves deeper into the fit gap process and ensure win - win situation for the
client and the candidate

 Use of technology and social media applications to hunt better

profiles as compared to job boards. Sites like LinkedIn,
Facebook, Twitter and other social and business networking sites are fast
becoming every recruiter’s trump card. Lot of head hunting can happen over
these networking sites.

 If your salary component are on the higher side and you

foresee that it’s going to be difficult to sustain then take adequate action now try
and offer a mix of lower fixed and higher variable with an assurance that
salaries will get back to normal once the market stabilizes.