If you have to forecast, forecast often – Edgar Fiedler
Fiedler has given us a good survival tactic — forecasting is indeed a good exercise, but it is subject to several dimensions and dynamics.
With every new calendar year, one thing that is universally done is to quickly review the year that went by and, in all seriousness, make plans for the New Year. This stock-taking not only helps in celebrating our successes and achievements, but also enables learning from the failures or setbacks of the previous year. In parallel, we need to scan the horizon to evaluate future opportunities.
The year 2016 has seen several ups and downs across the world. Headline events such as the UK voting for Brexit and the election of Donald Trump have created political ripples through the global scene. While an event like Brexit has no precedence and the pundits are still figuring out likely consequences for the UK, the European Union, and the world at large; Trump as the US President-elect is yet to take charge and speculation is already rife with regard to the impact this will have on the relations between US and other countries.
Back home In India, the major economic event of the year was demonetisation. Though demonetisation has already happened in 1946 and again in 1978, this time around, the magnitude of the problem is at a higher level. ATM lines are yet a mile long and cash is dear — near in the bank account, yet so far and out of reach! It is no doubt challenging to accurately predict the impact of this event, not only in terms of duration but also with respect to economic and social changes.
I see the following broad trends emerging in the labour market landscape:
1. More jobs in the formal labour market
With 490 million in the labour force, India is among the fastest growing labour markets. The challenge is that over 90 per cent of the labour force continues to remain in the unorganised sector and thus vulnerable to exploitation by various middlemen and sometimes even unscrupulous employers. The Government is trying hard to bring more workers under the formal labour market Widening the provident fund and ESIC coverage is one method adopted by the government to achieve this.
The demonetisation process, with the consequent drive to cashless payments, has resulted in more and more employers choosing to pay their employees electronically. The central government has issued an ordinance to amend the Payment of Wages Act, 1936 to allow employers of certain industries to make payments through the electronic mode and cheques. These are some of the incremental steps towards reaching the goal of increased number of jobs in the formal market.
2. Lower Attrition and lesser increments
It is an employer’s market! The Indian economy, for several years now, has been known for its higher growth trajectory along with high inflation. To insulate employees from the impact of high inflation, organisations were forced to give double digit annual increments. Consultants in the compensation and benefits arena routinely release annual survey and reports which talk about wage inflation in the 10-12 per cent range. The attempt is to hedge the salary against the prevailing inflation. The other reason for such high wage increase is also due to the scarcity of talent in several sectors, resulting in a perpetual ‘talent war’.
A recurring nightmare for the leadership team of an MNC’s Indian subsidiary is to convince their global headquarters that double digit annual increments are imperative. More than giving out inflated increments, the issue is that at the international headquarters, employees have annual salary hikes of one or two per cent at best.
This trend is gradually changing. With moderating inflation rates and slower growth of the companies, organisations are now tightening their belts. In many companies, attrition levels are steadily coming down, which indicates there is a truce in the war for talent.
3. Return of Investment vs Return on Investment
The year 2016 had also witnessed big changes in the start-up landscape. Funding became relatively scarce and investors shifted their focus from growth at any cost to profitable growth. Companies are no longer willing to “buy” marquee talent at astronomical salaries and individual job seekers are equally becoming more discerning in their career choices.
Let’s look at some potential sectors for job growth in the year 2017.
Goods and Services Tax, which is considered to be the most important tax initiative in independent India, is now closer to reality. Both the houses of Parliament have passed the bills and now the GST council is working on the various rules. In all likelihood, GST will come into effect by October 2017, but not later than April 2018.
It is no wonder that a lot of hiring is happening in anticipation of the GST law. Consulting companies are the first to be off the block with massive hiring. They are recruiting consultants who will do the impact study of GST for their clients and submit their reports. There is also the requirement of having to tweak the accounting systems to be GST compliant.
The implementation of GST will add 1-1.5 per cent to the GDP and will create super-sized warehouses. Like the mammoth Amazon Fulfilment centres in the West, these massive warehouses and sophisticated supply chains will need highly trained and specialised talent. The sector will need warehouse designers, managers, route-planners, supply-chain analysts, transport managers and industrial engineers.
Data Security Fraud and Risk Management professionals
The demonetisation announcement by the Prime Minister provided a massive impetus for payment service businesses across the country. Many of them reported multi-fold increases in their transactions and there are interesting anecdotes of cobblers and chaiwallahs accepting electronic payments. My neighbour had her maid share her bank account details so she could credit her salary. Autos and local cabs are trying to match taxi-hailing services like Uber in terms of online payment.
I hope this momentum is sustained and there is a long-term, fundamental shift in our behaviour towards financial transactions. As they say, life is a mixed bag and there are crooks and fraudsters eagerly waiting to exploit gullible people.
The government has taken measures to curb the menace of the middleman in the last couple of years by steadily pursuing the financial inclusion agenda through Jan Dhan accounts linked to Aadhar numbers. The demonetisation drive has indeed fast forwarded this process aggressively. Despite there being several payment service providers and payment gateways, security is still questionable. There are bound to be flaws in the software, and more worrying is the likelihood of increased fraud incidents. This will lead to a great demand for fraud investigators and risk management professionals.
In summary, the year 2017 will present exciting job opportunities for talented and motivated professionals. Develop your skills and widen your perspective to make the best of the plethora of opportunities. Break away from the herd, pursue newer avenues and learn how to navigate the job market to work in your favour.
Getting back to forecasting, to adapt words from The Profit , the future is very much like the present, or recent past; just wider and longer.
Wishing you all a very happy and fruitful new year!