“Improvement in labour supply in the post-Covid period has a bearing on overall wage growth easing from the previous year,” said Laveesh Bhandari, president, Centre for Social and Economic Progress.
The average wage growth rate of regular salaried employees in urban areas declined to 4.9% in 2022-23 (July-June) from 8.3% in 2021-22, according to periodic labour force survey (PLFS) data.
The decline was much more pronounced for lower-paying jobs – such as clerks, service and scale workers – than managerial and professional jobs.
The average wage growth for managerial jobs in urban areas was 19.6%, whereas it increased 5.4% for clerks and 1.4% for service and sales workers. “The difference in the growth of wages of corporate sector employees and other regular salaried employees points to the K-shaped recovery,” said Santosh Mehrotra, visiting professor, Centre for Development Studies, University of Bath, UK.
Experts said another divergence is taking place among male and female employees. The gap between the earnings of male employees and female employees at managerial, professional and technical levels in urban areas increased to 1.27 times in 2022-23, compared with the average of 1.19 times witnessed in 2021-22.A higher number of women entering the workforce and archaic perceptions of men being more dependable than women may be hindering progress, said experts. Female labour force participation in urban areas increased to 25.4% in 2022-23 from 23.8% in the previous year.
“Companies are more likely to reward men, as they are expected to work for longer,” said Madan Sabnavis, chief economist, Bank of Baroda.
In 2022-23, wages of men employed in managerial work increased 20%, compared with a 9% increase in wages of female managers.
However, Sabnavis said perceptions were changing and certain sectors, like BFSI (banking, financial services and insurance), had achieved pay parity.
Declining job prospects
The decline in unemployment has been higher for women than men, indicating further divergence, said experts. “Women have to bear the brunt of job losses whenever the economy is not performing well. The PLFS data reflects this reality. Not all sectors have fully recovered, and investment is not growing. Hence, jobs have stopped growing,” Mehrotra said.
When the recovery happened, companies thought it would be sustained, but when growth slowed it was inevitable companies would cut costs, said Mehrotra. “Besides, mergers and acquisitions are taking place, leading to companies shedding flab,” he said.