BENGALURU: Despite corporate profitability surging to a 15-year high in FY24, wage stagnation is pronounced, especially at entry-level IT positions, Economic Survey 2025 has pointed out.
For many quarters now, lower or delayed wage hikes have been reported in IT companies despite firms posting huge growth in profits and revenues.
"Corporate profitability soared to a 15-year peak in FY24, fuelled by robust growth in financials, energy, and automobiles. Among Nifty 500 companies, the profit-to-GDP ratio surged from 2.1% in FY03 to 4.8% in FY24, the highest since FY08," the survey said.
Large corporations, especially in non-financial sectors, significantly outperformed their smaller peers in profitability. However, while profits surged, wages lagged.
"A striking disparity has emerged in corporate India: profits climbed 22.3% in FY24, but employment grew by a mere 1.5%," it said.
An analysis by SBI reveals that 4,000 listed companies recorded a 6% revenue growth. At the same time, employee expenses rose only 13% , which is down from 17% in FY23, highlighting a sharp focus on cost-cutting over workforce expansion.
The survey 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," it says.
The survey suggests that to secure long-term stability, a fair and reasonable distribution of income between capital and labour is imperative, and it is essential for sustaining demand and supporting corporate revenue and profitability growth in the medium to long run.
Focus on mental health
The Economic Survey also talks about prioritising mental health in the workplace as it can also enhance worker productivity. This comes amid debates over a 70 and 90-hour work week.
"Work culture comprises the myriad of factors that define an individual's experience at work, including work amount/load, manager and peer relationships, and perceived control. Global data, mirrored in India, suggests that work culture strongly impacts mental well-being," it says.
The Economic Survey also pointed out the Sapien Labs Centre for Human Brain and Mind, India survey that says that promoting a better workplace culture will lead to better mental well-being.
While the hours spent at work are informally considered a measure of productivity, a previous study has documented adverse health effects when hours exceed 55-60 per week. "Spending long hours at one’s desk is equally detrimental to mental well-being. Individuals who spend 12 or more hours at a desk have distressed/struggling levels of mental well-being, with a mental well-being score approximately 100 points lower than those who spend less than or equal to two hours at a desk," according to the survey
