Economic Survey calls for revision of wages
Chennai: While corporate profitability soared to a 15-year peak in FY24, wages are lagging. To secure long-term stability, a fair and reasonable distribution of income between capital and labour is imperative, said the Survey.
A striking disparity has emerged in corporate India - profits climbed 22.3 per cent in FY24, but employment grew by a mere 1.5 per cent. State Bank of India (SBI) analysis reveals that 4,000 listed companies recorded a modest 6 per cent revenue growth. At the same time, employee expenses rose only 13 per cent -down from 17 per cent in FY23 - highlighting a sharp focus on cost-cutting over workforce expansion.
Despite Indian companies achieving a stable EBITDA margin of 22 per cent over the last four years, wage growth has moderated. This uneven growth trajectory raises critical concerns. Wage stagnation is pronounced, particularly at entry-level IT positions.
While the labour share of GVA shows a slight uptick, the disproportionate rise in corporate profits—predominantly among large firms—raises concerns about income inequality.
A higher profit share and stagnant wage growth risk slowing the economy by curbing demand. 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. It is essential for sustaining demand and supporting corporate revenue and profitability growth in the medium to long run.
