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Thailand: Jobless growth
Sumit Kumar, 26, has been out on the street for last two and a half months.
A resident of Sahaspur, a sprawling village outside Dehradun, the capital of Uttarakhand state in north India, Mr Kumar was laid off on Dec 12 by Aircel, an Indian mobile network operator. He had been working as a territory sales executive (TSE) in Kotkhai, about 60 kilometres from Shimla.
Mr Kumar was laid off with thousands of others after Aircel, 74% owned by Maxis Communications of Malaysia, decided to shut down in six circles, as the areas for which firms hold operating licences in India are known: Himachal Pradesh, Haryana, Gujarat, Madhya Pradesh, Maharashtra and Uttar Pradesh (West). Aircel has since filed for bankruptcy.
Laden with a debt of around US$2.3 billion, the company could not cope with the “disruptive” entry of Reliance Jio which offered 4G services at rock-bottom prices, compared with the 2G that Aircel was marketing. Jio is owned by India’s wealthiest businessman, Mukesh Ambani.
Since Dec 12, Mr Kumar has been looking for a job, but he says he has found no offers in his chosen line of work.
“Recruitment in Idea (another cellular operator in India) is on hold because it is in the process of merging with Vodafone. Airtel offered me a job but at one third of the salary I was getting with Aircel. Besides, it is only offering me the post of canopy executive, which is a level lower than a TSE,” he told Asia Focus.
Joblessness has also forced Mr Kumar to postpone his wedding plans. “My family planned to organise my elder brother’s and my marriage together. Now only his marriage will take place. How do I marry without a job?” he asks. A science graduate, Mr Kumar sustains himself by tutoring students in his home.
Mr Kumar is far from the only person to have suffered amid the turmoil in the telecom sector in India. According to Rajan S Mathews, director-general of the Cellular Operators Association of India (COAI), telecom companies have laid off at least 70,000 employees in the last couple of years because of dwindling profits, declining investments, mergers and acquisitions and the aggressive advance of Reliance Jio.
“Earlier we had 13 companies. Now we have only four,” Mr Mathews said. Among those that have either exited the business or merged with other companies are Reliance Communication (Rcomm) owned by billionaire Anil Ambani, the brother and longtime bitter rival of Mukesh Ambani; Videocon, Etisalat, Tata Teleservices, Tata Teleservices Maharashtra, Telenor, Swan Telecom, and Sistema (run under the brand name MTS). Aircel filed for bankruptcy in Mumbai last month, a step that may lead to its closure finally. Aircel, Rcomm, Tata Tel and Telenor alone had more than 25,000 employees on their payrolls.
Tata Teleservices, Tata Teleservices Maharashtra and the local Telenor unit were merged with Bharati Airtel, making it the largest telecom operator in the country, with 291 million subscribers as of January. Idea Cellular and Vodafone India are in the process of merging (together they had 411 million subscribers as of Jan 31) and Rcomm sold its consumer business assets to Reliance Jio, which has 160 million customers.
There has also been a cascading effect of the consolidation and shrinkage of telecom operations on vendors such as Ericsson, Nokia and Huawei. “There is a reduction in hiring,” Mr Mathews said. He estimates that another 10,000 more jobs will be lost in next six to nine months, mainly at Idea Cellular and Vodafone India after they link up.
Deepak Brijwasi, a territory sales executive with Idea in Dehradun, acknowledged that changes could be in the pipeline as the company will have to re-evaluate all its employees after the merger.
Mr Brijwasi, 27, said that certain distributors of Vodafone India and Idea Cellular might also be dropped after the merger. “Only distributors with a bigger worth would be retained. The rest will have to go,” he said. Before 2014, Indian telecom operators were only mandated to offer 2G services.
Reliance Jio, which entered the market in December 2016, was the first to offer 4G-based services. It shook up all of its competitors who were still using old technology.
BK Syngal, a former chairman of the public-sector communications company Videsh Sanchar Nigam Ltd (VSNL), blames the winding up of telecom companies and consolidation on multiple factors. “Predatory” pricing by Reliance Jio was a major factor in his view.
“There were blatant regulatory shortcomings. There was no level playing field. Why should they (Telecom Regulatory Authority of India) bend backwards for one player?” he asked rhetorically in an interview with Asia Focus. Manoj Gairola, the editor of Telecom Tiger, dismisses such concerns. He likens the competition between Reliance Jio and other telecom operators to a race between bullock carts (2G) and a fast car (4G).
“If you go from Delhi to Mumbai using bullock carts this is what will happen,” he said.
Mr Mathews and Mr Syngal are hopeful that the Indian telecom sector will start to stabilise and turn around within a year or two after the consolidation. “New technologies like 5G, the Internet of Things, cloud computing, and so on will bring the turnaround and create jobs,” said Mr Mathews. Mr Syngal believes the expansion in rural areas, data penetration, the Digital India programme and smart city projects will lift the sector.
“In the rural sector, telecom reach is only 60%. Data penetration has increased to only 15-20%. As well, Digital India and smart cities would require the addition of networks,” he said.
But it is not just the telecom sector that has seen retrenchments in recent years, and that should be a concern for the Narendra Modi government. Information technology, business process outsourcing (BPO) and banking and financial services have also been shedding jobs. According to the most recent quarterly employment survey, the IT/BPO sector lost 16,000 jobs in July-September last year.
Around 13 million new job seekers enter the market in India each year. The Mumbai-based Centre for Monitoring the Indian Economy (CMIE) last month put the number of unemployed in the country at 31 million. In said the unemployment rate was 7.1% in the week ended Feb 25, up from 6.7% a week earlier.
The Indian economy is expected to grow by between 7% and 7.5% in the current fiscal year. It has surpassed China as the world’s fastest-growing economy but employment is not keeping pace.
“500 million children under 25 will be looking for jobs in future. There will be tremendous pressure on the economy,” Mr Mathews said, calling on the government to make new investments and lure more foreign investors.
Source: https://www.bangkokpost.com/business/news/1430947/jobless-growth