Hiring by corporate India slowed dramatically in FY24, according to a study by Bank of Baroda (BoB), which noted that jobs grew by a mere 1.5% last year compared with 5.7% in FY23 among a sample of 1,196 firms.

To be sure, this sample included only large and medium firms and inclusion of India’s informal sector would have given a better picture.

The top five firms with the most headcount a year earlier ended up reporting lower employee numbers in FY24, according to BoB.

The bank said higher numbers in 2022-23 was on account of a lower base set by the pandemic. “A reason for this slowdown is that FY23 was the first post pandemic year when there was a certain degree of voluntary and involuntary displacement of staff. Therefore, there was a tendency for growth in employment to be higher in FY23 as activity was ramped up. The same necessity was not felt in FY24 resulting in a lower growth rate,” BoB observed in its report.

Sectoral trends, however, showed broad divergence with the highest job growth (in terms of head count) of about 19.4% seen in the retail sector. Headcount shrank the most in hospitality and logistics with a 12% dip in each industry.

The analysis divided industries into job accelerators, job creators, job stabilisers, and job destroyers. The study found that retailing, trading, infrastructure, realty, iron and steel, and finance sectors were job accelerators, where head count growth was above 10% in the past year.

Telecom, plastic products, banking and FMCG had a head count growth between 4%-6%, emerging as the job creators. Media, automobile ancillaries, insurance, consumer durables, capital goods among others emerged as job stabilisers with a job growth of up to 4%. In some sectors like chemicals, headcount was almost stagnant with a minor growth rate of 0.3%.

The ‘worst category’ of industries were the ‘job destroyers’. Head count shrank 12% in the logistics and hospitality sector. IT, which created a sizeable share of service jobs shrank nearly 2%. Head count contracted in labour intensive sectors like textiles and economically crucial sector like power. “Clearly this was a case of companies resorting to downsizing which could be motivated by a variety of reasons,” according to the report.

Growth trends in head count did not mean a slowdown in sectoral health, as hospitality sector recorded a 12.5% increase in sales. The same was true in IT, where the sales expanded 5%. Even among sectors in the job stabiliser category, the gap between sales growth and head count growth was wide. For instance, with a modest 3% head count growth, sales of media and entertainment sector grew 13.4% in the current year compared with a year ago. “Decisions on employment are hence not based on current business conditions but on other factors such as business prospects, order book, existing staff as well as those on the bench,” the study observed.

While the overall numbers suggest a slowdown in employment growth in the organised sector, the micro numbers reveal a mixed picture. Most of the companies (700) of the 1,196 analysed, had a head count growth, 121 did not register any growth in head count and only in 375 companies, had the head count shrunk, the analysis showed.