Why Indian retail ecosystem is touted to be the springboard to job creation

For a country with the largest populace of youngsters coupled with rising aspirations and purchasing power, strangely the retail sector has not lived up to its potential.
Retail Job Creation

For many years, any talk around job creation centered on the exceptional contribution of the information technology sector. For a country with the largest populace of youngsters coupled with rising aspirations and purchasing power, strangely the retail sector has not lived up to its potential. Retail sector’s contribution to the country’s gross domestic product has just touched double digits. Its contribution to employment still remains a paltry eight per cent. Notwithstanding the fact that a whopping 92 per cent of the market comes from the unorganised sector, experts – economists, recruitment specialists, analysts and industry leaders – agree that the retail industry has not contributed its might to job creation. There are an estimated 15 million mom-and-pop stores in the country. But the travesty is that they do not offer much scope for employment since they are mostly family businesses.

The policy push
Recent policy developments and the impending entry of global retailers could well change the narrative of this sector in an unprecedented manner. Policy to allow 100 per cent foreign direct investment in food retail, though met with skepticism by certain quarters of the industry, is likely to hasten the entry of some of the biggest global food retail brands into India. Food is easily the biggest expense for any household in India and no large retailer can ignore the sheer market size and opportunities to scale. The entry of food retailers is expected to spark a demand for pertinent talent in the areas of areas of operations, sales, logistics and customer support across fresh and lateral hires. Outside of food, already hiring by the world’s largest retailer and biggest furniture retail chain has begun.

Another shot in the arm for the sector has been the Model Shops and Establishment Bill recently approved by the Union Cabinet. While it is up to the respective state governments to adopt the law in partial or full, it is widely hoped that most would do so as employment generation is a key priority for all states. The law if implemented will allow malls, multiplexes, restaurants and shops to remain open 24X7 boosting chances of job creation. More importantly, it will help to bring more employees into the formal sector from the informal or unorganised sector which employs a disproportionately high number of about 440 million. The number of people employed by the formal or organised sector is a dismal 30 million as per the Economic Survey for 2015-16.

The reform process for the sector was put in motion with the rules for ecommerce segment being floated earlier this year. While there may be a few compliance matters that need to be sorted out by the ecommerce players, there is now clarity in regulation. The resulting consolidation within the segment put the focus on creating better customer experience and has led to more hiring for customer facing and engagement roles.

The temp rush
The next wave of transformation has already begun for the retail industry with impressive hiring of temporary workforce by ecommerce and brick and mortar players for the upcoming festive season. Temporary and contractual roles in online and offline retail now come with attractive pay packets and generous incentives. Today, lot of freshers are taking up such roles due to lucrative pay. This year is witnessing good demand of 40,000 to 60,000 temp staff for the festive period from October to December. Last festive season triggered the rush for temp workers and the trend continues with an increase of 10 to 15 per cent in demand this year. The demand is being fueled by ecommerce, FMCG, consumer durables, international fashion houses and supermarkets.

Things are looking up on the permanent jobs front as well and those shifting jobs this year can expect salary hikes of 20 to 25 per cent. This has been a refreshing change for a sector generally bogged by high attrition due to low salaries and long working hours. Hopefully this is a harbinger of things to come. Estimates by analysts suggest that the sector may touch USD one trillion by 2020 which will not just make it one of the biggest in the world but also a springboard for job creation in India.

Authored By: Kamal Karanth, MD, Kelly Services and KellyOCG, India

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