Naresh Lal, 23, had a dream. In 2008 he enrolled in an obscure engineering college in Indore where he paid a total fee of Rs 4.5 lakh for a four-year course. Lal was the first in the family to go to college. “My father was happy that I’d be a software engineer and get a good job at one of the IT firms,” says Lal.It didn’t quite work out that way. After graduating last year, Lal did not land a job for months. A move to Bangalore — the cradle of software services — followed, but the job didn't. Sporadically he would get leads of a recruitment drive from his friends and they would all flock to the IT firm’s campus. “There would be a long line of 3,000-4,000 people,” he says. Overwhelmed, companies would have little option but to call in just a fraction of that number for the interview, and ask the others to go.In February this year, Lal moved out of Bangalore to Bhopal where he joined a small IT company. “They said they will start paying after three months,” he says. Five months of working without pay wore Lal down, who early this month returned to Indore. “I had thought after my college I will ease my father’s burden. I feel terrible that I am myself a burden today.”Lal (whose name has been changed as he did not want to reveal his identity) is not alone. Some 500 engineers graduate out of his college every year. Indore alone has roughly 150 such colleges. Across India, close to 17.6 lakh engineers graduated from 3,500-odd engineering colleges in 2012-13. Beyond the 2 lakh who would have passed from Tier I and II institutions, virtually all of the remaining may well be staring at a predicament similar to that of Lal.“I haven’t seen anything like this in my career since my early Infosys days,” says TV Mohandas Pai, who joined the IT services giant in 1994, and is now chairman at Manipal Global Education. “Nobody is hiring — IT, manufacturing, infrastructure, construction, government…nobody. Jobseekers are despondent. They are losing hope.”India, the world’s second-most populous country and home to the world’s second largest workforce (469 million workers), has a problem. Sure, the ongoing economic slowdown and the accompanying woes — rising inflation and interest rates, a weakening rupee and stalled investments — will inevitably take its toll on jobs. Yet, a wide section of CXOs, HR honchos and employees that ET Magazine spoke to reckon that this is the worst job market since liberalisation in terms of severity, duration, sweep and scale.Even the sudden crash precipitated by the global financial crisis five years ago and the aftershocks on the employment front appear less severe than the current scenario.“In 2008, India never really saw gloom and doom. It was also very short. This time I cannot even begin to describe the mood. It is the most difficult job market that I have seen,” says Arun Das Mahapatra, partner-in-charge, Heidrick & Struggles India, a global executive search firm. His firm has always been growing at 15-20% over the years but Mahapatra says this year he would be happy if he is able to do as much business as he did a year ago.Mahapatra’s mood mirrors what executives are feeling. A little over half of the 2,096 respondents to an ET online poll agreed that this is the worst job market they have ever seen (a little over a third of the respondents disagreed). The majority of those polled also feared they could lose their jobs. Almost three-fourths of them don’t fancy a chance of getting a job offer from a firm in the sector they’re currently employed in. And perhaps the worst manifestation of the despondency is that 63% either do not expect or are unsure wether the job market will improve in the next 12 months.Employers are as downcast as the employees. Most of the CXOs in an ET Magazine snap poll are uncertain about the outlook for the next 12 months, with only 13% of the 23 surveyed actually planning serious hiring; close to half of the CXOs polled say they will hire only for replacements; a little over a fourth have frozen recruitments altogether; and a few are hunkering down for a season of pay-cuts and layoffs. “Things are bad today. Worse, there is no hope it will get better in the next 12 months,” says Rashesh Shah, chairman of Edelweiss Group.In many sectors, the current mood is a culmination of belt-tightening that may have well begun when the party ended in 2008. An ETIG analysis of 541 BSE-listed companies reveals that the workforce in many key sectors has dipped between 2007-08 and 2012-13. From manufacturing to services, infrastructure to entertainment, and media to textiles, the staff count has gone down almost secularly.The steel industry, for instance, downsized by 10% — from 1.82 lakh to 1.63 lakh workers in the past five years. Telecom, till recently a sunrise sector, saw a 17% dip, to a little over 82,000. In shipping, the fall is 17% (on a much lower base), in real estate 8% and in the paper sector 23%.Remember, however, that these numbers pertain to just the organised sector where just under 10% of India’s workforce is employed. The scenario would be far worse in the unorganised sector. Says Bibek Debroy, economist at the Centre for Policy Research: “The big growth so far was happening in the unorganised sector. The real story is that even they are not hiring now.” Also, contract workers tend to slip below the radar of statistics.Employed by thirdparty contractors, they often do not show up on the rolls of large companies. In the automotive sector, for instance, contract workers could constitute as much as 60% of the workforce. With capacity utilisation down from 80% in 2011 into the 65% range now, the temporary staff would be the first to come in the line of fire.For the first time since 1991, virtually every sector in the economy is under pressureIn the past downturns, new sunrise sectors like IT, BPO, telecom held out hope. There is none this timeThe 2004-08 boom phase gave Indians a taste of fat pay and ample jobs. So the bad times feels harsherSince 2006-07, engg graduates are up from 5.5 lakh to 17.6 lakh today. MBA grads up from 94,000 to 3.85 lakh. But jobs haven’t kept paceBroadly, India has had four phases of slowdown since it opened up its economy in 1991. The first one was in the mid-1990s, triggered by the East Asian economic crisis. The next was at the turn of the century coinciding with the dotcom bust and 9/11. And then came the global credit crisis in 2008.The current slowdown, which began in 2011, and its impact on the job market, is distinct for a number of reasons. The most important difference is that this is the first time that every sector of the economy is hurting, says Debroy. In the past, there has inevitably been a sunrise sector — think IT/ITeS, telecom, organised retail, aviation — to partly compensate for a downturn in traditional sectors. This time around there is no sunrise sector in sight.Two, for multiple reasons of politics, policy logjam and weak consumer sentiment, the manufacturing sector is seeing its worst phase in the past 20 years, says DK Joshi, chief economist, Crisil India, a ratings agency. He adds that even the once-sizzling services sector has slowed down. From mining to gems and jewellery, infrastructure and real estate — sectors that created millions of jobs, especially at the bottom of the job pyramid — are going through a rough patch.Take, for example, the automobile industry which employs about 19 million people directly and indirectly. “This is the first time ever that every segment of the auto industry — commercial vehicles [CVs], passenger vehicles [PVs], two-wheelers — is declining,” says Vishnu Mathur, director general, Society of Indian Automobile Manufacturers.CVs have been the worst affected with sales declining for over 16 months. PVs have seen a sales decline for nine months. And two-wheelers, one of the most robust auto segments, too, is showing a decline for four months now.There is another factor that makes this slowdown particularly more painful — the low after the high. Ask Rajesh Kumar (name changed), 44, who has worked with some of the big brand names like the Tatas, Airtel, Genpact and American Express, rising up the corporate ladder as a senior HR executive.“Most of us moved up the ladder in a growing economy. We always had jobs chasing us than vice versa,” he says. Pay packets too kept getting fatter. Part of the ‘crore club’ (those with an annual salary of over Rs 1 crore), life was good with fat raises and hefty bonuses.“All that is over now,” he says. Kumar has been looking for a job since 2011 but with little luck. Dejected and disappointed, he is finally taking the consultant route, working on projects with B-schools. His wife, who had quit working to bring up their two children, has taken up a job to supplement the family income.“Thankfully I made enough money and I had the wisdom to save it. Life is tough but I am coasting along,” If a large section of young executives is finding it difficult to come to terms with life in the slow lane, that’s because they’ve only experienced the boom times. “There is a massive perception problem. People have short memories,” says Jahangir Aziz, chief economist for India, JP Morgan, a bank.In the pre-1991 days and even through the 1990s most Indians would have been lucky to simply find a job. The staid PSU jobs were what dreams were made of. And it was normal for PhDs to take up a bank clerk’s job.Wellpaying jobs were few — but a closed economic environment offered stability. “Today, the economy has become a lot more volatile. And Indians are still getting used to the cycles of the economy,” says Aziz.Fresh graduates are the worst affected. India is seeing a demographic swell in the number of working-age Indians entering the workplace. Currently pegged at around 469 million workers, at least 12 million new workers are entering the job market every year and will do so for the next 20 years. Ironically, as the number of workers rise, employment intensity in the Indian economy has been coming down as companies look for more automation and employee productivity improves. Joshi of Crisil says in 2004-05, it took 12.2 people to produce Rs 1 million worth of output in the economy. In 2011-12, that number was down to 7.2 people.Almost in tandem, literacy levels are rising and the number of educational institutes too is rising. For example, between 2006-07 and 2012-13, the number of engineering colleges has gone up from 1,511 to 3,498; a n d the number of engineering graduates has gone up from 5.5 lakh to 17.6 lakh. The number of B-Schools too has gone up from 1,132 to 2,467 and the number of MBA graduates from 84,000 to 3.85 lakh.Here lies the rub: during the boom time in 2006-07, around 50% of India’s 5.5 lakh engineering graduates could have been absorbed by the IT industry alone. But, today, the slowing and embattled sector can barely hire 10% of the graduates.The resultant oversupply is leading to engineers having little choice but to do jobs that don’t do justice to their qualifications — like sales and marketing. The desperation to land a job is compounded by the anxiety to pay back loans taken to bankroll education. “Many graduate engineers are taking up low-end sales and marketing jobs for as low a salary as Rs 5,000 per month. But they are unhappy and constantly on the lookout,” says Harpreet Grover, cofounder, Co-Cubes, a company that connects students and campuses with companies.What would worry companies — particularly those that have been on a sustained downsizing exercise — is that there isn’t much flab left in the system. Still, they may be under pressure to shrink the workforce further. “There are companies that are very lean today and hence have little scope to cut,” says Mahesh Vyas, MD of CMIE, a business information firm.According to a CMIE calculation, the net working capital cycle days — a ratio that measures how many days it will take for companies to convert working capital into revenue — had come down from 79 days in 2000-01 to a two-decade best of 20 days in 2009-10. In 2011-12, it only marginally moved up to 29 days, indicating that India Inc today is operating at a high efficiency level.K Ramkumar, executive director of ICICI Bank, is one of the few senior executives who thinks this isn’t the worst that job seekers in India have seen. He feels 2008 was worse. “My sales staff attrition is still hovering around 30-40%. HDFC, ICICI and Axis Bank are hiring for retail banking. So what are we talking about!”But he acknowledges the sense of gloom — not because it has set in but because it’s on its way. “Today, things are not as bad but people are feeling it that way because they can smell the coming doom. I see it getting really bad and remaining so for the next 18 months if things don’t change.”While senior executives who earned fat pay packets in the boom times and tucked away a stash for rainy day would be better placed to deal with joblessness, it is the fresh graduates and the mid-level managers who will feel the heat the most. “Indians will have to learn to live in a volatile economy with all its ups and downs and prepare for it,” says Aziz.But Vyas of CMIE is optimistic. Qualitatively, Indian companies are on more robust ground today than they ever were, fly-by-night promoters are fewer than in the ’90s and companies are far more efficient today. “This [the downturn] is part of the economic cycle. All we need is a small trigger to set things right again.” Until that happens, keep in mind that a pay cut or a lost job isn’t the end of the world — perhaps there lie opportunities in places you never needed to look before.