Report

on
Effect of Economic Slowdown
on Employment in India
(April – June 2009)

Government of India
Ministry of Labour & Employment
Labour Bureau
Chandigarh
July 2009
 Acknowledgement

I, sincerely thank the Secretary, Ministry of Labour &

Employment, Government of India for entrusting the important
task of conducting Quarterly surveys on effect of economic
slowdown on employment in India, to the Labour Bureau. We
conducted the first such National survey for the quarter October-
December, 2008, though on a small sample basis, during
January, 2009 and submitted report within a period of one
month.

The second survey was conducted in April, 2009 for the period
Jan-March, 2009 and the report submitted in mid of May, 2009.
Present quick employment survey which is third in the series
covers the period April-June, 2009 is a revisit to the units covered
during the second quarterly survey conducted in April, 2009. I
appreciate the wholehearted efforts of the staff of Labour Bureau
towards collection of data and preparation of the report in such a
short time.

I am thankful to the Labour & Employment Adviser and Statistical

Advisor of the Ministry in guiding us. I am also grateful to the
State Labour authorities for the wholehearted support and co-
operation extended in making this survey successful.

Dr. K.S.R.V.S Chalam

Director General
Place: Chandigarh
Date: 31.07.2009
 Contents

Executive Summary

I Introduction 1-3

II Analysis of Employment & 4-13

Earnings Trends

Annexure

I Questionnaire canvassed in the

present survey
 Executive Summary

 The current third “quick Employment Survey” is a revisit to the

units covered in the second quarterly survey to assess the

direction of change in employment during April-June, 2009 over

March, 2009.

 During the survey, 3,003 units are covered in 21 centres spread

across eleven states.

 In the current survey eight sectors viz. Textiles, Metals, Leather,

Automobiles, Gems & Jewellery, Transport, IT/BPO and

Handloom/Powerloom are covered.

 At overall level, the employment has declined by 1.3 lakh during

April-June, 2009 over March, 2009.

 The most affected sectors are the export oriented units

especially in Textiles and Gems & Jewellery.

 In the non-exporting units, the employment has in fact increased

slightly during the period under study.

 The results reveal that in Metals & Automobiles sectors, the

units are offering more jobs to contract workers.

 Chapter-I

Introduction

1.1 World economy has been passing through a rough weather. Many of the
developed and developing countries are facing the wrath of economic
slowdown. The Gross Domestic Product (GDP) growth is declining, trade
has come down and there is widespread retrenchment of workers all over
the world. To mitigate the adverse impact of this wide spread economic
slowdown, various measures are taken world over. But the impact of
slowdown is so wide and deep rooted, that it will take some time to
recover.

1.2 One of the yardsticks to measure the impact of slowdown is the decline
in employment. In developed countries like United States and United
Kingdom, employment and unemployment data are released at regular
intervals. This helps in measuring the impact of economic policy on
employment so as to take appropriate measures. However, in India such
frequent and timely data on employment and unemployment are not
available.

1.3 In this backdrop, Labour Bureau has been conducting a series of

quarterly “Quick Employment Surveys” to study the impact of economic
slowdown on employment in India. The scope of these surveys is limited
to the sectors understood to have been badly affected by the slowdown.

1.4 The first quarterly survey was conducted in the month of January, 2009
to study the impact during the quarter Oct-Dec, 2008. The findings of
the survey were released in the last week of January, 2009. In this
1
 survey seven important sectors of the economy viz. Textiles, Metals,
Automobiles, Gems & Jewellery, Transport, IT/BPO and Mining were
covered.

1.5 The second quarterly survey was conducted in the month of April, 2009
to study the impact during the quarter Jan-Mar, 2009. The detailed
report of the survey was released in the mid of May, 2009. During this
survey two additional sectors namely Leather and Handloom/Power loom
were covered whereas the mining sector covered during the first survey
was excluded.

1.6 In the first quarterly survey a sample of 2,581 units was covered at 20
centres covering eleven States/UTs. In the second quarterly survey, the
updated frame obtained from NSSO was used to draw a fresh sample. A
total of 3,192 units from 21 centres spread over eleven States/UTs were
covered during the second survey.

1.7 The current quarterly survey, which is third in the series, was conducted
in July, 2009 to study the employment trends during the period April-
June, 2009. During this survey the units covered in the second survey
have been revisited. In addition to the information on employment, the
present survey also attempts to capture the changes in wages/salaries of
workers in the sectors studied.

1.8 As stated earlier, the sample units which were covered in the second
survey are revisited in the current survey. Therefore, no new fresh
sample was drawn and the sampling design, estimation procedure and
the number of centres/States/UT are same as in the second survey. It
may be mentioned that during the second quarterly survey a two stage
stratified sampling technique was adopted. The first stage units-
districts/centres were selected using purposive sampling and the second

2
 stage units, the establishments were selected using circular systematic
sampling. In the current survey all the units covered in April, 2009 (i.e.
3,192) were revisited, out of which 3,003 units provided the information.
The rest 189 units could not be covered because of non-cooperation,
non-contact with the owner etc. Sector wise units covered in the second
quarterly survey and in the current survey are as under.

Table 1: Sector-wise number of units covered

Sl.No. Industry/Group Number of Number of
units covered units covered
in the second by revisiting in
survey the current
(April, 2009) survey
(July, 2009)
1 Textiles including Apparel 1,224 1,112
2 Metals 889 858
3 Leather 182 177
4 Automobiles 160 153
5 Gems & Jewellery 240 225
6 Transport 88 87
7 IT-BPO 278 267
8 Handloom/Powerloom 131 124
Overall 3,192 3,003

1.9 The schedule used to collect information from the sample units is at
Annexure-I.

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 Chapter-II

Analysis of Employment & Earnings Trends

2.1 The present quarterly report, third in the series, covers the period
April-June, 2009. As mentioned earlier, in the present survey the
sample units covered during the second quarter (Jan-March, 2009)
have been revisited to assess the direction and rate of change in
the employment during April-June, 2009 in relation to March,
2009. Table 2.1 presents sector-wise changes in the estimated
employment at various reference periods as compared to March,
2009.

Table 2.1: Changes in Estimated Employment during April-June,

over March, 2009
(In lakh)
Sl. Industry/Group April, 2009 Apr-May, Apr-June,
No. 2009 2009

1 Textiles -0.09 -1.92 -1.54

2 Leather 0.05 0.28 0.07
3 Metals 0.01 -0.09 -0.01
4 Automobiles 0.01 0.07 0.23
5 Gems & Jewellery -0.28 -0.27 -0.20
6 Transport -0.02 -0.03 -0.01
7 IT/BPO -0.28 -0.34 -0.34
8 Handloom/Powerloom 0.23 0.34 0.49
Overall (cumulative) -0.38 -1.95 -1.31

2.2 It may be observed from the above table that the employment has
declined during the quarter April-June. During the month of May,
the estimated employment declined by 1.57 lakh whereas in the
month of April the decline was 0.38 lakh. However, there is slight
increase in the employment (0.64 lakh) during June, thus showing

4
 an overall decline of 1.31 lakh during this period. The maximum
decline in employment is seen in Textiles sector where it has
declined by 1.54 lakh during April-June over March, 2009. Other
sectors experiencing low/insignificant decline in employment are
Gems & Jewellery, IT/BPO, Metals and Transport. In Leather,
Automobiles and Handloom/Powerloom sectors there is slight
increase in employment during the quarter April-June over March,
2009. Decline in employment during the months of April and May
period may be attributed to seasonality. Personal interaction by
our officers with some Textiles and Gems & Jewellery
establishments has revealed that shortage of workers during the
period is experienced by them every year. According to them, the
migrant workers prefer to visit their place of origin during this
period, resulting in their decreased availability.

2.3 The average monthly percentage change in employment in different

periods compared to March, 2009 is given below in Table 2.2.

Table 2.2: Average Monthly Percentage Change in Employment

during April-June over March, 2009 (in %)

Sl. Industry/Group April, 2009 Apr-May, Apr-June,

No. 2009 2009
1 Textiles -0.11 -1.18 -0.63
2 Leather 1.34 3.93 0.62
3 Metals -0.07 -0.29 -0.03
4 Automobiles 0.10 0.59 1.24
5 Gems & Jewellery -6.80 -3.26 -1.65
6 Transport -0.65 -0.42 -0.09
7 IT/BPO -0.86 -0.51 -0.34
8 Handloom/Powerloom 3.26 2.38 2.29
Overall -0.25 -0.64 -0.29

5
2.4 It may be observed that at overall level, the employment during the
quarter April-June has declined by 0.29 per cent. The results
further indicate that in absolute terms the decline in employment
in Gems & Jewellery sector during April-June over March, 2009 is
only 0.20 lakh whereas in percentage terms the average monthly
decline in employment is maximum in this sector (1.65 per cent).
In Textiles and IT/BPO sector the average monthly decline in
employment during the period April-June over March, 2009 is at
0.63 per cent and 0.34 per cent respectively. The Automobiles
sector shows a steady increase in average monthly employment
over different periods under study.

2.5 The employment in a unit is divided into two broad categories viz.
direct workers and contract workers. The category of direct
workers includes permanent, temporary and casual workers
employed directly by the unit or its owner. Contract workers on the
other hand are hired to perform specific functions through a
contractor for a defined period of time. It is generally believed that
the units prefer to replace direct category of workers with the
contract workers over a period of time as the contracts can be
terminated or not renewed depending on the production or
requirement. But in short-run, when there is a decrease in
demand, it is expected that the units would terminate contractual
workers first as terminating the direct workers would be more
cumbersome. However, results of the present survey indicate that
the employment in direct category has declined whereas the
employment of contract workers has gone up. This implies that
direct workers have large proportion of casual and temporary
employees. The sector-wise changes in employment of direct

6
 workers and contract workers in the period April-June over March,
2009 in absolute terms are presented below in Table 2.3.

Table 2.3: Change in Employment of Direct and Contract workers

during April-June over March, 2009 (in lakh)

Sl. Industry/Group April-June, 2009

No.
Direct Contract

1 Textiles -1.52 -0.02

2 Leather 0.04 0.02
3 Metals -0.26 0.25
4 Automobiles 0.06 0.17
5 Gems & Jewellery -0.21 0.01
6 Transport -0.02 0.01
7 IT/BPO -0.38 0.04
8 Handloom/Powerloom 0.57 -0.08
Overall -1.71 0.40

2.6 It may be seen from table 2.3 that the employment of direct
workers has declined by 1.7 lakh during the period April-June over
March, 2009. Such decline is observed in Textiles, Metals, Gems &
Jewellery, Transport and IT/BPO sectors. It may be further
observed that in Metals sector, the decline in employment of direct
workers is associated with increase in employment of contract
workers during the same period. It implies that the sector is
offering more jobs to contract workers. Similarly in Automobiles
sector, the overall increase in employment during the period April-
June over March, 2009 is estimated at 0.23 lakh, in which only
0.06 lakh are direct workers and rest contract workers. The survey
results reveal that contract workers are increasing steadily. At

7
 overall level 0.40 lakh contract workers have added during the
period April-June over March, 2009.

2.7 It may be seen from the above table that except in Textiles and
Handloom/Powerloom sectors, the employment of contract workers
has increased in all the others six sectors during the period April-
June over March, 2009. The significant increase is in Metals and
Automobiles sectors where the contract workers have respectively
increased by 0.25 lakh and 0.17 lakh during the period April-June
over March, 2009.

2.8 In the first quarter (Oct-Dec, 2008) survey results, it was

established that the units which have exposure to exports are the
most affected. In the second quarter (Jan-Mar, 2009) report there
was some improvement in the declining trends of employment in
the exporting units. The current survey results which are based on
revisit to the units covered during April, 2009, establishes that the
employment in the exporting units have declined considerably. The
sector-wise changes in employment of exporting units in absolute
terms are presented below in Table 2.4.

8
 Table 2.4: Change in Employment of exporting units over March,
2009 (in lakh)

Sl. Industry/Group April, Apr-May, Apr-June,

No. 2009 2009 2009
1 Textiles -0.87 -1.26 -1.52
2 Leather 0.01 0.19 -0.04
3 Metals 0.05 0.01 -0.01
4 Automobiles 0.00 0.01 0.05
5 Gems & Jewellery -0.26 -0.27 -0.23
6 Transport - - -
7 IT/BPO -0.24 -0.33 -0.48
8 Handloom/Powerloom 0.25 0.35 0.57
Overall -1.07 -1.29 -1.67

2.9 It may be seen from the above table that at overall level the
employment in exporting units has declined by 1.7 lakh during the
period April-June over March, 2009. In Textiles sector which is
prominent in terms of employment opportunities in the Indian
economy, almost all the employment decline in this sector is
accounted by the exporting units. The demand factors might have
reinforced the seasonality. Out of 1.54 lakh decline in employment
in the Textiles sector during the period April-June over March,
2009, 1.52 lakh decline is in the exporting units. Similarly in case
of Gems & Jewellery sector also, almost all the jobs lost are in the
exporting units. However, in Handloom/Powerloom sector export
units 0.57 lakh jobs have been added during the period April-June
over March, 2009.

2.10 The average monthly change in employment of exporting units in

percentage terms are given below in Table 2.5.

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 Table 2.5: Average Monthly Change in Employment of exporting
units over March, 2009 (in %)

Sl. Industry/Group April, 2009 Apr-May, Apr-June,

No. 2009 2009

1 Textiles -2.56 -1.86 -1.50

2 Leather 0.44 3.44 -0.46
3 Metals 0.89 0.12 -0.06
4 Automobiles 0.11 0.46 1.28
5 Gems & Jewellery -9.85 -4.95 -2.90
6 Transport - - -
7 IT/BPO -1.03 -0.69 -0.68
8 Handloom/Powerloom 7.20 5.16 5.55
Overall -1.47 -0.88 -0.76

2.11 The survey results reveal that the average monthly decline in
employment of exporting units at overall level during the period
April-June over March, 2009 is 0.76 per cent. The significant
declining trend is seen in Gems & Jewellery sector where the
decline is 2.90 per cent, followed by Textiles sector (1.50 per cent)
and IT/BPO sector (0.68 per cent).

2.12 In contrast to the exporting units, wherein employment has

declined, the non-exporting units having domestic market for their
products are able to generate additional employment during the
period April-June over March, 2009. At overall level employment in
the non-exporting units has increased by 0.35 lakh during the
period April-June over March, 2009. The sector-wise changes in
employment of non-exporting units in absolute terms are
presented in Table 2.6.

10
 Table 2.6: Change in Employment of non-exporting units over March,
2009 (in lakh)

Sl. Industry/Group April, 2009 Apr-May, Apr-June,

No. 2009 2009
1 Textiles 0.78 -0.66 -0.02
2 Leather 0.04 0.09 0.10
3 Metals -0.04 -0.10 0.00
4 Automobiles 0.00 0.06 0.18
5 Gems & Jewellery -0.01 0.00 0.03
6 Transport -0.02 -0.03 -0.01
7 IT/BPO -0.04 -0.01 0.15
8 Handloom/Powerloom -0.01 -0.01 -0.08
Overall 0.69 -0.66 0.35

2.13 Above table shows that the impact of economic slowdown on the
units catering to domestic market is negligible and majority of the
sectors have created additional jobs during the period April-June
over March, 2009. The significant among them is the Automobiles
sector where a maximum 0.18 lakh jobs are increased during the
period April-June over March, 2009. Similarly, in IT/BPO sector
0.15 lakh jobs are created during the above period in the non-
exporting units.

2.14 The average monthly percentage changes in employment of non-

exporting units are presented below in Table 2.7. In percentage
terms the average monthly increase in employment at overall level
in the non-exporting units during the period April-June over
March, 2009 is 0.14 per cent.

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 Table 2.7: Average Monthly Change in Employment Trends of non-
exporting units from March, 2009 (in %)

Sl. Industry/Group April, 2009 Apr-May, Apr-June,

No. 2009 2009

1 Textiles 1.64 -0.70 -0.01

2 Leather 4.32 5.57 4.18
3 Metals -0.37 -0.51 -0.01
4 Automobiles 0.10 0.62 1.23
5 Gems & Jewellery -0.98 -0.02 0.74
6 Transport -0.65 -0.42 -0.09
7 IT/BPO -0.42 -0.06 0.52
8 Handloom/Powerloom -0.37 -0.18 -0.71
Overall 0.86 -0.41 0.14

2.15 It may be further observed from the above table that significant
increase in employment of non-exporting units in terms of
percentage during April-June over March, 2009 is in Leather
sector. The average monthly increase in employment of non-
exporting units in leather sector is 4.18 per cent during the above
stated period.

2.16 In addition to assess the impact of slowdown in terms of

employment, information on the regular earnings of workers are
also collected with a view to see whether these have been affected
by the economic slowdown in the economy. It is generally believed
that the economic slowdown adversely impacts the quality of
employment, besides the quantity reflected by the decline in
employment. The quality aspect is measured in terms of decrease
in average earnings received by the workers. The regular earnings
include regular wages or salaries, payment of allowances like

12
 dearness, overtime, house rent and production bonus etc. which
are paid more or less regularly for each pay period. The sector-wise
average monthly changes in earnings are presented below in Table
2.8.

Table 2.8: Average Monthly Changes in Earnings from March, 2009

(in %)

Sl. Industry/Group April, 2009 Apr-May, Apr-June,

No. 2009 2009
1 Textiles -1.08 0.01 -1.10
2 Leather -1.49 1.52 2.43
3 Metals 3.42 0.82 2.39
4 Automobiles 15.90 6.77 5.36
5 Gems & Jewellery 7.17 2.49 4.68
6 Transport 6.50 -0.79 -0.02
7 IT/BPO -3.47 -1.30 -2.18
8 Handloom/Powerloom -4.00 -1.23 -0.63
Overall -2.11 -0.52 -1.29

2.17 It may be seen from above table that the earnings of workers at overall
level have declined by 1.3 per cent during April-June over March, 2009.
The change in earnings is in the same direction as the change of
employment; except in Metals, Gems & Jewellery and
Handloom/Powerloom sector. The significant increase in average
monthly earnings is in Gems & Jewellery sector (4.68 per cent) despite
the fact that in percentage terms the maximum decline in employment is
registered in the same sector (1.65 per cent). This may be due to the
reason that the existing workers are paid overtime allowances.

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 GOVERNMENT OF INDIA ANNEXURE-I
MINISTRY OF LABOUR & EMPLOYMENT
LABOUR BUREAU, CHANDIGARH
EMPLOYMENT SCENARIO: April–June 2009

I Identification Particulars
a) Zone-State
b) Name of the District/Centre
c) Name of Unit

d) Complete Address of the Unit

e) DSL NO. (Original)

f) Name of the Person contacted
g) Status of the Unit (Orginal-1, Substitute-2)
h) Reasons for substitution
Unit closed before March, 2008-1,
Address not traceable-2, NA-9
i) If Substitute DSL NO. of Substitute
j) NIC code (3 – digit)

k) Type of goods Manufactured /Produced

l) Whether the unit is export oriented

Yes-1, No-2
II- Month wise number of Workers & Earnings
Employment Employees as on last Total Wage/Salary Bill
Month
Status working day (In Rs.)
Direct
March , 09 Contract
Total
Direct
April , 09 Contract
Total
Direct
May , 09 Contract
Total
Direct
June, 09 Contract
Total

14
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