BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Motilal Oswal Report
Employee cost of listed companies (~2,800 companies) increased by 13% YoY in H1 FY22, marking the highest growth in almost three years.
The IT sector clocked an even higher growth (of 19.4% YoY) in employee expenses in H1, with as much as 22% growth in Q2 FY22. This has set off a debate on whether India is on the cusp of wage inflation.
If true, this will have serious implications for the economy and financial markets. Since we have been very vocal with regard to our concerns relating to the financial position of Indian households, wage inflation may alter our thesis.
In this note, using various data sources, we explain why there is no reason to fear wage-led growth and inflation in India.
Employee costs consist of two parts – employment opportunities and wage growth. The wage bill of a company can go up either because of higher employment or due to increased wages per employee.
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