The global financial meltdown claimed its first casualty in Los Angeles on October 7 with a 45-year-old NRI killing five members of his family before taking his own life. That’s an indicator of the turmoil that families are going through owing to economic hardship. In September alone, 169,000 people lost their jobs in the US. This is more than double the tally for the first eight months of the year, with the US economy losing an average of 75,000 jobs each month.
Employment has diminished for nine consecutive months, eliminating 760,000 jobs, according to the Labor Department’s report. Over the last year, the unemployment rolls swelled by 2.2 million to 9.5 million. On Friday, Goldman Sachs forecast that the jobless rate would reach 8% by the end of next year, the highest in 25 years. India has also started feeling the heat. Sandeep Chaudhary, business head at Hewitt Associates says the outlook for the next 12 to 18 months ranges from cautious to pessimistic as the ripple effect of the US financial crisis hits the country.
“Going forward, the environment looks more difficult as the impact spirals from the financial services, IT/ITeS and export sectors to the manufacturing and consumer goods sectors”, agrees Naresh Malhan, MD, Manpower India.
According to Malhan, mega projects and expansion plans are being reviewed, with the corporate sector now focused on managing costs and reducing borrowings. “We are just at the beginning of the problem in India. I expect January to June 2009 to be the worst period. Early signs are emerging from the way budgets are now being designed, with hiring decisions only passed if the need is critical and travel either completely discouraged or downgraded to economy class only”, says Sunit Mehra, managing partner, Hunt Partners India.
“The recent downturn is weighing on the minds of employers. They are not conducting widespread layoffs; yet, there is not much appetite to add staff either,” says Jeffrey A Joerres, chairman & CEO of Manpower Inc.