The monthly average income of a salaried person in urban India has grown only 7.5% from Rs20,030 in the second quarter of fiscal 2022 to Rs 21,647 in the first quarter of fiscal 2023
New Delhi, NFAPost: The monthly average income of a salaried person in urban India has grown only 7.5% from Rs20,030 in the second quarter of fiscal 2022 to Rs 21,647 in the first quarter of fiscal 2023, according to a report by ICICI Securities.
Meanwhile data from the Periodic Labour Force Survey (PLFS) shows that for a casual labourer in urban India, the daily wages increased from Rs385/day in Q2FY21 to Rs464/day in Q1FY23.
On the flip side, average income of a salaried person in rural India has stagnated at Rs14,700/month for the 18-month period ending Q1FY23 as per the annual PLFS study. However, daily wages of rural casual labourers have increased from Rs302/day in Q2FY21 to Rs368/day in Q1FY23.
The table below shows average salary income has stagnated in rural India while it has been rising steadily in urban India.
Although there has been pick-up in daily wages for casual labourers, 46 per cent of India’s workforce is dependent on agriculture output and severe weather conditions this year pose a key risk to this income head.
“Key concern about growth in compensation of employees within private sector urban jobs lies in the IT and start-up sectors, where hiring activity has dipped due to demand concerns, and whose contribution to the listed space wage bill is as high as 42 per cent,” said Vinod Karki, analyst at ICICI Securities.
IT sector has the lion’s share (42%) of the aggregate wage bill of listed private corporates
However, in terms of the number of employees, the IT/BPO sector accounts for just 12% of the organised sector workforce, or ~1% of the overall workforce
Data on monthly hiring trendsby foundit Insights Tracker shows a 7% slowdown in hiring compared to the same time last year.
This decline can be attributed to several factors. One of them is India’s economic slowdown, which has forced companies to cut expenses, including hiring efforts.
The significant skills gap in the nation has also complicated employers’ hiring process by making it challenging to locate qualified candidates. Furthermore, the ongoing technological disruption is changing industries and leading to job changes, impacting hiring activity in general.
Of the 27 industries the tracker examined, BFSI sector, which encompasses banking, financial services, and insurance, experienced a decline of 10% on year.
This dip may be attributed to the headwinds faced by the global economy, such as rising inflation, interest rates, and supply chain disruptions.
Similarly, the Automotive/Ancillaries/Tyres industry has also faced a downturn, showing an 11 per cent decline. The Engineering/Construction and Production/Manufacturing sectors witnessed declines of 14% and 16% respectively, indicating a sluggish hiring environment in these industries.
The FMCG, Food & Packaged Food industry maintained stability, with no significant change.
The BPO/ITES sector faced challenges with a decline of 17% year-on-year (YoY).
Only nine sectors showed increased e-recruitment activity from the previous year. The Shipping/Marine industry witnessed a growth of 45%, reflecting a thriving sector triggered by increased port capacity, advanced technological implementation, and environmental sustainability initiatives.
Similarly, , due to its data-driven strategies and emerging advertising trends, the Advertising, MR, and PR industries experienced a significant recovery, with a notable 28% increase in recruitment activity. The Retail, and Travel & Tourism sectors have also shown consistent strong growth, both with a 27% increase compared to the previous year. Additionally, the Office Equipment/Automation sector grew 4%.
Moreover, the formal sector accounts for just 11% of the overall workforce as seen in the table above.
Informal jobs dominate non-agri jobs at 72% while agri jobs are largely informal; this results in a total informal workforce in excess of 85%
“Growth in aggregate wage bill of the informal segment holds the key for aggregate income growth as it accounts for the lion’s share of non-agri working population (72% of the non-agri workforce). It can be assumed that the agri-related workforce, which makes up 46% of the overall workforce, is largely informal thereby taking the overall informal workforce north of 85%,” said Niraj Karnani, analyst at ICICI Securtities. But near term risk to rural income is the uncertainty around agricultural output in FY24 due to severe weather conditions.
Also this: 21.5% of the overall workforce has a regular salary or wages, but 53% of such workers have no social security benefits
In rural India, jobs are largely in agriculture and construction industry, whereas in urban India, manufacturing, services and discretionary consumption dominate
