Employees in Majority of Industries Failed to Secure 5% Pay Raise in FY24

Eight out of 11 industries in India were unable to provide even a 5 per cent salary increment to employees in the previous fiscal year, according to TeamLease's Jobs and Salaries Primer Report for FY 23-24. This modest growth is particularly notable against the backdrop of retail inflation, which averaged 5.4 per cent during the same period.

The report recognised the retail sector as the top performer, achieving a year-on-year average salary growth of 8.4 per cent, followed by consumer durables and the banking, financial services, and insurance (BFSI) sector at 5.2 and 5.1 per cent, respectively.

Other sectors, including fast-moving consumer goods (FMCG), logistics, healthcare and pharmaceuticals, and real estate, offered comparatively moderate increments ranging between 2 per cent to 4.9 per cent. This, according to the report, showed steady demand for skilled professionals in these industries.

Kartik Narayan, chief executive officer of staffing at TemLease, interprets the figures as indicative of a broader trend in compensation growth, driven by the increasing demand for specialised skills in India. “This is not just about incremental salary growth; it reflects a deeper transformation in the job market,” he says.

The findings of this report were foreshadowed in the 2023-24 Economic Survey where India’s chief economic advisor (CEA) V. Anantha Nageswaran, had reported a troubling disparity. Based on financial results from over 33,000 companies, the survey revealed that hiring and compensation growth have lagged, even as corporate profits before taxes quadrupled between financial years 2020 and 2023.

Experts note this to be a part of the broader “jobs crisis” that exists in India. A survey by ADP Research Institute last year revealed that 69 per cent of Indian employees feel underpaid despite taking on additional work, compared to 43 per cent globally. In contrast, only 27 per cent of employees in China and 46 per cent in Singapore share this sentiment.

Like TeamLease’s Narayan, even the Economic Survey suggests that this trend can be attributed to the Indian corporate sector's emphasis on skilled manpower. “Estimates show that only about 51.25 per cent of the youth are deemed employable. In other words, one in two young people are not yet ready for the workforce straight out of college,” notes the survey, while adding that both hiring and compensation lies in the interest of the companies.

In this context, the labour market eagerly anticipates the progress of the policy measures announced in the Union Budget for 2024-25 aimed at improving the workforce, particularly the internship scheme. Sources in the Ministry of Corporate Affairs say a total of 90,949 internship opportunities were listed on the portal by 193 companies when it was opened to the applicants on 11 October. The opportunities are said to be distributed across 24 different sectors.