Across sectors, India’s largest companies have been able to limit revenue losses, and in many cases, even grow market-share as cash-strapped smaller
Even though large companies have seen a recovery in their wage bills, small PAs have been relentlessly cutting wages during the epidemic.
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| The Inequality Among Companies Reflected in Wage Cuts, Too |
The rise in corporate India's profits during the epidemic has attracted a lot of attention in recent weeks. But the number of gross profits seems to be hiding more than what they declare. According to data from the Center for Monitoring Indian Economy (CMIE) show, top diesel (or top 10%) accounted for more than 95% of the nearly 3000 listed companies in the first nine months of fiscal 2021. Data for the final quarter are not available for a comparative sample of firms but the available sample indicates that the broad trend has not changed.
Across the sector, India’s largest companies have been able to limit revenue losses, and in many cases, market share has also increased as smaller companies pulled out of cash have struggled. Larger companies had higher revenue and profits even before the epidemic. But the divide between the largest companies and the rest has never been as sharp as it is today.
Surprisingly, this part also appears in their wage bills. In the June 2020 quarter, when India went through the toughest lockdown in the world, the top Diesel wage bill fell slightly. But it shifted to positive territory in the subsequent quarters and rose 5% (marginally) in the December-end quarter. Contrast it with the bottom decile (or the smallest 10%). This group of companies saw a 16% year-over-year decline in meager wages during the June 2020 quarter and no recovery has yet been achieved. In the other two quarters, the wage cut was only more. Even for companies a little larger than this set, wages have seen double-digit declines over the past financial year.
Wage bust
The first nine months of the fiscal year 2021 saw a marginal decline (-0.4%) in companies' wage bills, but in inflation-adjusted terms, this translates into a 6.6% decline over the previous year. For smaller companies, real wage cuts are more drastic. The largest companies may be able to secure their employee base but the rest have either reduced salaries or fired employees or used a combination of the two for payroll costs.
Real wages are cut after decades of already sluggish wages. Compared to the wage boom during the year 2001-11-11, wage growth declined sharply in the post-2011 period, a wide range of wage data shows.
To some extent, the wage slump reflects the post-2011 recession in almost all economic indicators, as corporate levels have risen and investments have dried up. Lack of new investments means less jobs. The weakened labor market translates into defeated wages. Epidemics have only increased drowsiness.
Uneven Benefits
Even during the pre-2011 wage boom, not all workers received the same benefits. The decline of trade unions since the 1980s and the increasing use of contract workers meant that the labor market had largely turned into a buyer's market, forcing blue-collar workers to stop accepting wagers. As in the West, outsourcing has helped companies get paid here. But the ‘outsourcing’ model here relies on domestic contract workers, who can be fired without much fuss over foreign workers. As in the West, a small sleeve of educated white-collar workers has benefited from increased productivity and growth. Even so, the salaries of managers, who make up less than 10 per cent of rs industrial workers, have risen sharply, despite Blue Collar's wages barely growing.
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