Jewelers are planning job cuts to reduce their fixed costs following a decline in business over the past two weeks due to demonetization.
Jewelers estimate an 80 percent decline in business since the cancellation of Rs 500 and Rs 1,000 currency notes on November 8. Despite this being the wedding season, which usually sees a spike in jewelry sales, the liquidity crisis has hit jewelers’ business.
“Business is paralyzed following demonetization of high-value currency notes. Job cut fears have gripped the sector,” said GV Sreedhar, chairman of the All India Gems and Jewellery Trade Federation.
India’s jewelry industry is estimated at Rs 4,15,000 crore. The industry employs 2.5-3 million workers. A joint study by the National Skill Development Corporation and KPMG estimated in 2015 that the sector would create 3.59 million additional jobs by 2022.
The industry faced a downturn earlier after the global economic crisis in 2008 during which it lost 15-20 percent of its skilled and unskilled workers to the textiles, agriculture and allied sectors.
“Jewelers have started reducing variable payments to workers but retrenchment is on hold awaiting changes in taxes and easier rules for cash transactions,” an industry source said. Earlier this year, the government lowered the limit for quoting permanent account numbers during jewelry purchases to Rs 2,00,000.
“There is no likelihood of jewelry demand reviving for a couple of months. Jewelers do not have money to pay artisans,” said Prithviraj Kothari, managing director, RiddiSiddhi Bullions, a bullion dealer in Zaveri Bazaar here. Workers have started opening bank accounts but the cash withdrawal limit of Rs 24,000 a week is inadequate for contractors to continue business.
“Sellers are also not able to monetize their gold because jewelers are paying in cheques that cannot be cashed due to the weekly withdrawal limit,” said Ranka Fatechand Nagraj, president, Maharashtra Rajya Sarafa Mahamandal, a Pune-based jewelers’ body. Ranka expects 10 per cent job cuts in the next two months.
Note: News shared for public awareness with reference from the information provided at online news portals.