A recent government report highlights a growing disparity between corporate profits and worker wages, raising concerns about India’s economic health. The study, prepared by FICCI and Quess Corp, reveals that while private sector profits have surged fourfold over the last four years, wages in several sectors have remained largely stagnant, exacerbating the financial struggles of workers.
The report, which examines wage growth from 2019 to 2023, shows that some industries, like engineering and manufacturing, saw minimal wage growth of just 0.8%, while others, such as FMCG, recorded a higher rate of 5.4%. Despite this, inflation has consistently outpaced wage increases, eroding the purchasing power of employees. Over the past five years, retail inflation ranged from 4.8% to 6.7%, further deepening the financial strain on workers, particularly in urban areas.
Economists, including Chief Economic Advisor V Anantha Nageswaran, have highlighted this issue, noting that slow wage growth is a key factor in the sluggish recovery of consumption in the post-COVID economy. While pent-up demand fueled a temporary surge in consumption, the lack of substantial wage growth raises concerns about achieving a full economic recovery to pre-pandemic levels.
The FICCI-Quess survey also revealed that wage growth across sectors varied, with the IT sector boasting the highest average wages of Rs.49,076, while FMCG sector workers earned the lowest average at Rs.19,023. The compounded annual growth rate (CAGR) for wages was lowest in sectors like engineering, manufacturing, and infrastructure, further highlighting the income gap.
These findings underscore the need for India Inc. to address wage stagnation and focus on creating a more balanced economic environment, where profits are shared more equitably with the workforce to support sustainable growth.
