His remarks follow recent comments by Chief Economic Advisor V Anantha Nageswaran, who pointed out that corporate salaries have not kept up with inflation.
Balakrishnan linked the decline in real wages to factors such as inadequate capital expenditure and persistently high inflation, particularly food inflation, which he stressed must be addressed to revive consumption growth
“The nominal rate of interest, which is the key variable, has remained the same for the past 22 months. There’s a deeper problem of declining real wages. Maybe, the immediate problem could be the central government’s capital expenditure – not the private sector – has not been maintained at the same level as it was in 2023-2024,” he said.
India’s CPI inflation moderated to 5.48% in November, down from 6.21% in October, while food inflation eased slightly to 9.04%.
Lohit Bhatia. President, Workforce Management, Quess Corp, on the other hand, stressed on the need for formal job creation.
Bhatia highlighted that the labour force participation rate is a little over 60% and out of a total labour force of 55 crore, only about 11 crore workers are present in the formal workforce.
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“We recommended incentivising formal job creation,” he said, adding that India’s minimum wage average is at ₹13,000-
₹15,000.
Amit Basole, Professor of Economics at Azim Premji University, told CNBC-TV18 that the overall earnings growth has been tepid but on the other hand, casual wages have been growing.
“Since the survey started coming out in 2017-2018, the regular wage growth has been barely 2% or 1% annual, self-employment earnings have been doing even worse…The one bright spot is casual wages, which have been growing quite strongly in PLFS,” he said.
India’s latest Economic Survey document highlights the need for the Indian economy to generate 7.85 million jobs annually in the non-farm sector by 2036 to meet the demands of a growing population.
In an interview with CNBC-TV18, Nageswaran pointed out, “On a sample of over 30,000 companies, profit before tax in FY20 was ₹5.3 lakh crore. And FY23, it had risen to ₹20.6 lakh crore, almost four times. So the private sector has had an excellent run, and they have great balance sheets now.”
The conversations around wage stagnation gains importance as Finance Minister Nirmala Sitharaman prepares to present on Union Budget 2025 on February 1.
However, staffing firm Teamlease Services’ Chief Financial Officer Ramani Dathi sees no inconsistency or unusual decline in salary hikes in the corporate sector over the last few years, except for the IT sector.
“The salary inflation for the three lakh employees that we have in our roles has been consistently between 6% and 8% year-on-year. Only for IT over the last one and a half years, it has slowed down to 2-3%,” Dathi told CNBC-TV18 on December 12.
Dathi does not believe fiscal or monetary policy intervention is needed at this point to improve employee pay and hiring practices.
Watch the accompany video for the full conversation
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