Surveys all across the world tell us the job market is back on track. Really? The Chief Executive magazine’s CEO index — America’s only monthly CEO Index — dropped to 63 in July, after having shown a gradual improvement. All components of the index are down, with employment confidence taking the biggest hit.
February saw the lowest ebb of the overall CEO Confidence Index at 39.2 which increased to a peak of 75.7 in May. Almost nine in 10 leaders (88.8 per cent) rated the ‘current conditions index’ poorly — this was an increase from 86.3 per cent of people who felt this way in June and 81.6 per cent in May.
What’s even worse is that pessimism over employment is reaching new heights. The ‘employment confidence index’ declined 25 per cent with 57 per cent of CEOs expecting a continued decrease in employment over the next quarter. Over 95 per cent rate the current employment environment as bad — the highest level for 2009. Less than 5 per cent think employment conditions are normal and virtually no one (0.4 per cent) thinks that they are good.
CEOs’ sentiment is mixed on where the US stands in the slowdown. As many as 33 per cent believe the worst is yet to come and 35 per cent believe the worst is happening now. The cause of renewed CEO pessimism has many sources, one of them being the belief that the current direction of the administration will deepen the downturn.
The survey is restricted to the US but should be a wake-up call for those in India who are rushing to conclude that the job boom seen in 2007 is almost back. The reality is that while the job market in India is showing signs of improvement, India Inc is still carrying out mainly replacement-hiring, and that too for critical talent. The overall mood is still hugely cautious and the thrust largely remains making employees do more with less.
Take ICICI Bank, one of the country’s largest recruiters earlier. Last year, the country’s largest private sector bank reduced its manpower to 34,000 from around 38,000, mainly through retirements and natural attrition. Though business has improved substantially, the bank intends to keep its overall employee base at the same level. Or consider the retail sector, one of the country’s largest employers a couple of years ago. The sector went in for heavy downsizing when the slowdown took place. Now that some of the retail chains have reported improved numbers, the expectation was that they would start recruiting once again. The reality is: Just no one is talking about opening the recruitment tap once again.
The head of a large retail chain head says the main problem is confidence. “I know things are improving, but I still don’t have the nerve to recruit people unless it’s absolutely essential. The downsizing in the last two years is still too fresh in my memory,” he says. A monthly consumer confidence survey done by Boston Analytics best captures the mood. While the sentiment about the nation’s unemployment continues to be pessimistic, there has been some improvement in ‘the level of pessimism’ in the last month. In the June survey, about 24 per cent of surveyed respondents observed a decrease in unemployment (compared to what it was 12 months ago) compared to 21 per cent in the May survey. On the expectations front, about 22 per cent of respondents felt that unemployment will decrease in the next 12 months compared to 19 per cent in the May survey.
The good news is that Indian CEOs are not as pessimistic as their counterparts in the US who took part in the Chief Executive magazine survey. A study done by Manpower says, despite the relatively weak forecast for the Indian market, it remains the most optimistic labour market among the 34 countries and territories surveyed globally. The survey of almost 5,000 employers across 30 cities in India indicates that at +19 per cent, the net employment outlook in the third quarter of 2009 compares favourably to China (+3 per cent), the US (-2 per cent) and the UK (-6 per cent). The most optimistic employment forecasts after India are reported by employers in Norway (+10 per cent) and Poland (+9 per cent).
The survey indicates that the job market in India is expected to remain steady in the next three months. The overall net employment outlook is in fact 6 percentage points weaker quarter-over-quarter while declining by 24 percentage points in a year-over-year comparison. Job seekers in the public administration and education sectors can look forward to the most favourable hiring environment, while the financial services and real estate sectors reported the least optimistic hiring intentions.
The best story of the Indian job market is on the compensation front. Despite the huge slowdown, only 18 per cent of Indian respondents participating in a study done by Mercer and CII said that they froze salaries at 2008 levels; 38 per cent froze pay enterprise-wide; just 16 per cent deferred pay increases and even fewer (4 per cent) decreased salaries from 2008 levels. That itself should be great news considering what’s happening abroad.
