Real wage declines slowing down economic growth, FMCG sector: report
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New Delhi: The real wages of most salaried Indian workers have either gone down or remained stagnant over the past six years, according to a survey by the Ministry of Statistics and Programme Implementation, The Wire reported.
This trend has reportedly negatively impacted purchasing power alongside affecting the economic growth.
The Periodic Labour Force Survey (PLFS) data showed that the average monthly earnings of rural workers came down from Rs 9,107 in 2017-18 to Rs 8,842 in 2023-24.
The trend also led to fall in the real wages of male and female workers in rural areas during this period.
However, urban areas marked marginal rise in real wages from Rs 12,847 in 2017-18 to Rs 13,006 in 2023-24.
But the growth in urban wages was sluggish, especially in the case of non-salaried workers.
The fall in real wages come just as corporate profits reported a significant surge.
It is reported that corporate profit to GDP ratio reached 15-year high in 2023-24 as the profit-GDP ratio of Nifty 500 companies rose to 4.8% from 4% in the previous year.
V. Anantha Nageswaran, the Chief economic advisor, linked the slow economic growth to low wage growth, affecting purchasing power which in turn impacted manufacturing sector.
‘From 2.1% of GDP to 4.8% of GDP is an impressive growth of the last just three years post Covid, but in comparison both hiring and compensation growth rate have been somewhat on the lower side or tepid. And that is also somewhat endogenous in creating less purchasing power in the hands of people, less demand for FMCG goods and light consumer durable goods. That is why you see the impact of that on manufacturing to some extent,’ Deccan Herald quoted Nageswaran as saying.
More important, the GDP growth marked the slowest pace in seven quarters, slowing down to 5.4% in the July-September period due to sluggishness in manufacturing.
