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Assocham expects more job cuts

Special Correspondent

Corporates in 7 sectors will lay off 25-30 per cent of workforce in 10 days

NEW DELHI: If the Diwali festivities this year have been dampened as a fall-out of the global financial meltdown, there appears to be much worse in store for India Inc. and its employees in seven business sectors.

According to apex chamber Assocham, corporates engaged in businesses such as IT-enabled services (ITeS/BPO), aviation, steel, financial services, real estate, cement and construction are set to lay off about 25-30 per cent of the workforce within the next 10 days as part of their cost-cutting measures to stay afloat.

In its analysis on ‘Job scenario post-Diwali’ based on direct interaction with the players concerned in these seven identified sectors, the chamber has noted that the painful step is in the offing as the company promoters “are no longer in a position to sustain their operations with existing manpower strength.”

Conclusive plans

Releasing the analysis here on Wednesday, Assocham President Sajjan Jindal said: “HR heads of majority of steel, cement, ITeS/BPO, financial and brokerage services including construction, real estate and aviation [companies] have drawn up conclusive plans to curtail their workforce by 25 to 30%, announcements for which is likely in [the] next 10 days or so.”

Mr. Jindal noted that , most of the corporates had desired to start lay- offs in a phased manner much before Diwali but were advised to defer their restructuring after the festivities.

“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 [denial of bonus and ex-gratia] that majority of Indian Inc. had already taken much before Diwali,” he said.

Substantial reduction

The third alternative — as is being devised and worked out by CEOs of companies engaged in these business segments — would be to curtail the perquisites of middle and senior management level executives.

Most of the CEOs have also agreed to accept substantial reduction in their packages, he said. The chamber has pointed out that the negative sentiments in the seven sectors could be turned into opportunities provided the Reserve Bank of India (RBI) discontinues with its tight monetary policy and reduce interest rates by at least three per cent. It has suggested that the apex bank should not be reluctant to further cut the CRR to six per cent and bring down the repo rate to seven per cent “for infusion of enough liquidity in the market which in turn would create lot of economic activities for creation of job opportunities.”

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