The Indian auto industry makes up almost half of the manufacturing output of India and it is facing a slowdown that has not been seen in the past almost one decade. Sale of vehicles has fallen sharply wand there are little signs that there can be a swift revival of the sector currently.
One of the worst affected companies is the largest auto company of India Maruti Suzuki that has a total of 18,845 temporary workers on average in the six months ended June 30 according to Reuters, which is lower by 6 per cent or about 1.181 compared to the same period a year ago. There has been an increase in job cuts since April this year, the company has said.
According to reports, no new hiring would be done by the company till here is a reversal of the industry in the industry.
While this publicly listed Maruti Suzuki is not mandated to report any reduction in its temporary workforce, this is the first time that such a thing has been disclosed by the company.
According to private data group CMIE, it appears that the downsizing is in line with the level of joblessness in India which increased to 7.51 per cent in July 2019 compared to a rate of 5.66 per cent in the same period a year before. That number excludes the marginal employees who work as day labourers and are often unemployed or underemployed.
Government jobless figures are out of date and lack credibility, say economists.
There has been no reduction in its 15,892-strong more permanent workforce, said Maruti Suzuki, which is majorly owned by Japan’s Suzuki Motor Corp. the company did not comment on any future planned retrenchments or on the freezing of new hiring.
In the first six months of the year, the auto giant had previously cut production by 10.3 per cent, the company had said previously. The company that is the maker of one in every two passenger vehicles in India reported a drop of 33.5 per cent in sale in July compared to the same month a year earlier.
The slowdown in the business sector is reflected in the reduction of the workforce, company Chairman RC Bhargava told the media. He added that this is reason that hiring some temporary workers is liked by car makers.
“One of the consequences of a slowdown is that the marginal players and weaker players find it difficult to survive. When do consolidations happen in business? Only when times are difficult,” he added.
According to reports, the company has also reduced the number of days with three shifts while some of the some assembly lines at the company factories were not opearting at the moment.
At the company’s Manesar and Gurugram plants, the average wage of temporary workers were about $250 a month, said Kuldeep Janghu, general secretary of the Maruti Udyog workers union.
Thousands of jobs in the auto industry have been put at risk because of auto sales downturn. About one fifth of their workforce could be retrenched by auto part makers in India because of the slowdown, said the Automotive Component Manufacturers Association of India (ACMA). This sector employs about 5 million people.
(Adapted from IBITimes.com)