Companies saved at least 25% on wage bill last year
CMIE study finds wage growth was the lowest in 18 years
Chennai: Wage bill of listed companies has seen the lowest growth in 18 years. Among the worst-hit sectors are tourism which has seen wage bills declining by 30 per cent and textiles by 29 per cent, indicating huge job losses.
The wage bill of 1,560 listed companies analysed by think tank CMIE recorded a 2.9 per cent increase in the June 2020 quarter compared to the same quarter a year ago. This is the lowest growth in wages recorded by listed companies in the past 18 years.
While manufacturing companies saw a 7 per cent fall in their wage bill, the services sector was a mixed bag.
Within manufacturing, the textile sector has seen the biggest hit with the wage bill falling by 29 per cent. Being a labour-intensive industry, this sharp fall in the wage bill implies a very sharp fall in employment in textiles. The same holds true for leather, another labour-intensive industry. Leather recorded a 22.5 per cent fall in its wage bill in the June 2020 quarter. Automobile ancillaries reported a 21 per cent decline in its wage bill and the automobiles’ wage bill was down by 18.6 per cent. These are also labour-intensive sectors.
In the services sector the wage bill of the tourism industry was down 30 per cent, hotels and restaurants down by 20.5 per cent, road transport down by 27.6 per cent and education by 28 per cent. Wage bill of the real estate sector was down by 21 per cent.
However, the wage bill of the telecom sector increased by 10.7 per cent. Banks saw a 16.6 per cent increase in their wage bill and securities broking companies saw a 13.5 per cent growth.
“What is revealing in this data is the stark differences between industries. A caveat before we discuss these is that these are still preliminary results and a better picture will emerge only after a month as companies have been allowed time till September 15 to publish their financial statements due to Covid crisis. Nevertheless, these results indicate a pattern which is worth noting even with these preliminary data,” said Mahesh Vyas, managing director of CMIE.
The data indicates big job losses in many industries in the first quarter of 2020-21. Salaried jobs have been stagnating in recent times. In 2017-18 they grew by 1.6 per cent and in 2018-19 they grew by a meagre 0.1 per cent before contracting by 1.8 per cent in 2019-20. As a result, salaried jobs in 2019-20 stood at 86.1 million. This fell to 68.4 million in April 2020. By July 2020, their count had fallen further to 67.2 million.