India is witnessing a steady increase in employment opportunities across various sectors. However, despite this positive trend, wage growth has not kept pace with rising inflation.
Status of Stagnant Wages
- PLFS (Periodic Labour Force Survey) Annual Report 2023-24:
- Job Growth: worker-population ratio increased from 34.7% in 2017-18 to 43.7% in 2023-24, indicating job growth exceeding population growth.
- Wage Disparity: While casual workers' real wages have increased, regular salaried workers have seen stagnant wages due to inflation.
- Economic Survey 2023-24:
- Corporate profitability: Soared to a 15-year peak in FY24. Corporate profits climbed 22.3 % in FY24, but employment grew by a mere 1.5 %.
- Stagnant Wages: Despite Indian companies achieving a stable EBITDA margin of 22 % over last four years, wage growth has moderated particularly at entry-level IT positions.
Concerns
- Slowdown in Economy: A higher profit share and stagnant wage growth risk slowing economy by curbing demand.
- Income Inequality: Disproportionate rise in corporate profits predominantly among large firms raises concerns about income inequality.
Need of Balancing Wage Growth with Rising Profitability
- Sustained economic growth hinges on bolstering employment incomes, which directly fuel consumer spending, spurring investment in production capacity.
- To secure long-term stability, a fair and reasonable distribution of income between capital and labour is imperative.