As business continues to decline over 80 per cent in last two months, jewellers plan to lay off workers to reduce their fixed costs.

Jewellers estimate an 80 per cent decline in business since the cancellation of `500 and `1,000 currency notes on November 8. Despite this being the wedding season, which usually sees a spike in jewellery sales, the liquidity crisis has hit jewellers’ business. “Business is paralysed following demonetisation 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 to Business Standard.

India’s jewellery industry is pegged at 4,15,000 crore and it employs close to 2.5-3 million workers. According to a joint study by the National Skill Development Corporation and KPMG the sector is expected to create 3.59 million additional jobs by 2022. During the global economic crisis in 2008, the industry had lost 15-20 per cent of its skilled and unskilled labours to other sectors. “Jewellers are currently reducing variable payments to workers but retrenchment is on hold awaiting changes in taxes and relaxed rules for cash transactions,” one of businessmen told. In the jewellery sector, 15-20% of workers, who are paid daily, have been affected.

Jewellery demand was earlier hit this year as Government made PAN card mandatory for the jewellery purchase of 2,00,000. The slack in the demand will continue further for couple of months due to non-availability of cash among jewellers to pay the artisans. Due to demonetisations workers were forced to open their bank accounts, however their money is stuck in the bank on account of withdrawal limit of `24,000 per week, which is making their livelihood miserable.

“Sellers are also not able to monetise their gold because jewellers 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 jewellers’ body to Business Standard. Ranka expects 10 per cent job cuts in the next two months. As many as 4 lakh people, mostly daily wagers, may have either lost their jobs or shunned work temporarily due to the lack of payment so far, and the number is only going to grow if the cash crunch persists, senior industry executives said on condition of anonymity.

The major sectors of the economy including FMCG, jewellery and SMEs have been hit post demonetisation, while the unorganised sector is seeing job losses, according to industry body ASSOCHAM. In an interview to PTI, Assocham President Sunil Kanoria said, “In unorganised (sector), which is the daily wage earner, there will be some impact at the moment… The sales will get affected so they (vendors) will not be able to pay on a daily basis. The small, unorganised sector of the economy will have some impact.” Sharing the ground-level scenario post the scrapping of 500 and 1,000 notes and the ensuing cash crunch, Kanoria said jewellery firms have been hit hard whereas the consumer goods area and small and medium enterprises have also been impacted.