Salary growth in India observed fastest in ten years, with a 14.3% increase in FY23: Report
The overall number of employees increased by 4%, reaching 7.5 million. This followed a noteworthy 7% increase in FY22, when the economy was still recuperating from the effects of the pandemic.
Salary growth in India observed the fastest in ten years, with a 14.3% increase in FY23. A Jefferies survey Report
The entire salary bill in India Inc increased by 14.3% in FY23, reaching about Rs 9.4 trillion, the fastest growth in a decade. Furthermore, the average wage in the organized sector increased by about 10%, reaching an eight-year high and greatly outpacing the country’s retail inflation rate.
According to a Jefferies survey of 7.5 million employees across 1,800 listed businesses, the big increase was mostly driven by significant compensation increases in the IT sector. When IT sector salaries are excluded, pay scale growth falls to 6.8%, in line with the 10-year average.
After accounting for new hires and retirees, the expected increase in wages per employee rises to an astonishing 15.6%, marking an eight-year high in the upward trend.
In terms of numbers, there was a 4% growth in the number of employees, reaching 7.5 million. This followed a 7% increase in FY22, when the economy had not fully recovered from the pandemic’s impact. Jefferies analysts conducted a study that revealed a slowdown in hiring in the IT sector, which was effectively offset by increasing hiring in the BFSI (banking, financial services, and insurance) sector.
BFSI employment increased by 8%, while IT employment increased by 6%. Notably, these two industries accounted for over 85% of all new employment creation throughout the year. Surprisingly, the data revealed a steady decrease in employment inside state-owned firms throughout FY23.
Economists predict that the increase in income and employment will stimulate consumer demand in the next quarters. Private consumption increased by 6% year-on-year in the June quarter, a considerable rise from the 2.8% reported in the March quarter.
This increase can be attributable to both lower inflation and higher wages. Consumer Price Index (CPI) inflation fell to 6.83% year on year in August, down from a 15-month high of 7.44% in July.
The services sector has driven the majority of job creation, while the impact of increased capital spending has yet to be completely realized. For example, at Larsen & Toubro (L&T), the number of contract workers stayed at 0.27 million in FY23, well below the high seen in FY15.
As the investment cycle gets traction, demand for labor, particularly at the lower end, is projected to rise, further encouraging consumption demand. According to Jefferies analysts, the construction sector will create around 7.5 million jobs over the next five years.
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