Why jobseekers are flocking to staid old public sector units

Why jobseekers are flocking to staid old public sector units

Jobseekers are flocking to staid old public sector units, many of which now pay better than their private counterparts, and offer security as well.

When Charles Sabbithi gets his undergraduate degree from the National Institute of Technology, Warangal, he has a choice. He can join a private pharmaceutical company or opt for a government-owned oil explorer instead.

The 21-year-old student says he is veering towards the public sector company. The reason: Oil and Natural Gas Corporation (ONGC) is offering him a higher package, including house rent and medical benefits for his parents and siblings. "The pay package I'm getting with ONGC is almost double of what Dr Reddy's Lab is offering me," he says.

Sabbithi is one of thousands of Indian students opting for public sector jobs over the private sector because of more attractive financial packages. With the economy in the throes of a slowdown and private sector hiring slowing this year, an increasing number of graduates are also turning to the public sector for job security. Jobs in core sectors such as manufacturing and energy, as well as other sectors such as banking are a major attraction on campuses today. An ASSOCHAM student survey, conducted between February and March, found 88 per cent of respondents preferred the public to the private sector. "Some public sector units might lack high-end infrastructure and facilities provided by their private sector counterparts," says Aditya Narayan Mishra, President, Staffing, and Director-Marketing at Randstad India, a human resources services provider.

"But they make up with benefits for employees like job security. Now, with the Sixth Pay Commission, salaries for government jobs have become more attractive, too." The numbers are telling. Gaurav Basu, who is about to finish his Master's in Geophysics from the Indian Institute of Technology, Bombay, is excited about starting work at Indian Oil Corp. The company is offering him a Rs 10.1-lakh package, higher than the average starting salary of Rs 7-8 lakh the private sector offers fresh engineering graduates. Most public sector units offer starting salaries between Rs 9-11 lakh.

The non-cash component of public sector jobs was always higher than in the private sector. And after the implementation of the Sixth Central Pay Commission in 2006, salaries are now on a par, public sector ones sometimes even higher than their private sector counterparts. State-owned companies in core industrial sectors such as chemicals and manufacturing offer higher pay packages.

But in the infotech sector, private companies still offer higher salaries. Despite the increase in demand for public sector jobs among students, campus hiring by government companies has not increased proportionately.

For example, the number of government companies visiting the Indian Institute of Technology, Bombay, for recruitment this year shrank to four from 13 in 2009/10. The fall is partly because of a 2012 public interest litigation filed in the Chennai High Court seeking a ban on campus recruitment by public sector companies on the grounds that the practice violated public employment policy. The court later lifted the ban.

"The Chennai court's earlier judgment did affect the participation last year where the companies said that they could not visit even if they wanted to," says Sapna Agarwal, Head of Career Development Services at the Indian Institute of Management, Bangalore.

Campus hiring by public sector units is also down because they prefer to use Graduate Aptitude Test in Engineering (GATE) scores or national entrance exams to hire fresh graduates. GATE is a standardised test to gauge a student's competence in subjects such as engineering and technology. NTPC Ltd has stopped campus recruitment altogether: it used GATE scores for all the 200 fresh engineering graduates it recruited last year. ONGC's campus hires account for only 20 to 25 per cent of recruitment requirements. The company uses a national entrance examination and an interview for the rest of its hiring. "The number of students appearing for the (GATE) exam has risen from 7.5 million to 12.1 million, which is nearly a 60 per cent rise over last year," says Mishra.

Apart from financial packages, the public sector is also luring students with better branding. Companies are playing up their Maharatna or Navratna status to attract new recruits. Maharatna and Navratna status allows state-owned companies to invest up to Rs 5,000 crore in new ventures without government approval. "To be a power to be reckoned with in the world, a good brand image is very important," says U.P. Pani, Director of Human Resources at NTPC. It's equally important to be a power with students.