Concern in govt: Pvt sector profit at 15-year high but salaries stagnant

From services to manufacturing, wages show marginal growth

- AANCHAL MAGAZINE & SANDEEP SINGH

THE SHARP SLUMP in economic growth rate to 5.4% in July-September this year has sparked concerns among policymakers that low single-digit income growth in the corporate sector despite 4x (four-times) growth in profits over the last four years, is one of the reasons for slowing demand.

What has triggered conversations within corporate boardrooms, key economic ministries, and between the two, is a report prepared for the government by industry chamber Ficci and Quess Corp Ltd, a tech-enabled staffing firm with 3,000-plus clients, which showed that the compounded annual wage growth rate across six sectors between 2019 and 2023 ranged between 0.8% for the engineering, manufacturing, process and infrastructure (EMPI) companies and 5.4% for fast-moving consumer goods (FMCG) firms.

What has made matters worse for workers even in formal sectors is a meagre or negative growth in real incomes i.e., wage growth when adjusted for price rise or inflation. Over the five years from 2019-20 till 2023-24, retail inflation rose 4.8%, 6.2%, 5.5%, 6.7% and 5.4%, respectively.

Chief economic advisor V Anantha Nageswaran referred to the Ficci-Quess report in at least a couple of his addresses in corporate gatherings, and suggested India Inc needs to look within, and probably do something about it. Sources in the government said weak income levels were one of the reasons for subdued consumption, especially in urban areas.

“Post-Covid, consumption rose with pent-up demand, but the slower wage growth has brought to the fore concerns about a full economic recovery to the pre-Covid phase,” a source in the government said.