Companies across major industry sectors are likely to reduce the number of employees by up to 25 per cent over the next 10 days as they try to cut costs and save margins amidst the economic turmoil, the Associated Chambers of Commerce and Industry of India (Assocham) has said.
The job cuts would mostly affect infrastructure industries like steel, cement, construction, real estate, aviation, IT-enabled services and financial services sectors, Assocham said in a report.
The report said the high interest rates and falling demand is adding to the effects of the global financial crisis to slow down the country's economic growth in the last two quarters, from the 9 per cent or more annual growth over the past four years.
Employers have are left with no other alternative for sustaining their operations with squeezed margins after drastic cost cutting measures, Assocham said in a statement.
The Reserve Bank of India last week cut its forecast for growth in the current fiscal to 7.5-8 per cent from the earlier 8 per cent.
The country's top private carrier Jet Airways last week announced sacking of 1,900 employees, citing declining demand and high fuel costs, but reinstated them days later on protests and political pressure. Also, realty firm Parsvnath Ltd said it would retrench "non-performing" employees, amidst slowing sales.
According to Assocham president Sajjan Jindal, human resource heads of majority of the companies in these segments have drawn up plans to curtail their workforce by 25 to 30 per cent.
"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" he said.
Assocham, however, felt that the negative sentiments in the seven sectors could be turned into opportunity provided the Reserve Bank discontinues with its tight monetary policy and decreases the interest rates by at least three per cent.