‘India Inc profits rise, but salaries and hiring not keeping pace’: government message to companies in economic survey

The Economic Survey 2023-24, presented by Finance Minister Nirmala Sitharaman on Monday, highlighted job creation and skill development as key policy areas. It also touched on the pay of private sector workers, saying India Inc.’s profits have risen significantly but compensation and hiring have barely kept pace.

“In terms of financial performance, the corporate sector has never been better off. Results from a sample of over 33,000 companies show that in the three years between FY20 and FY23, pre-tax profits of the Indian corporate sector nearly quadrupled… The growth in hiring and compensation has hardly reflected this. But it is in the interest of companies to ramp up hiring and compensation,” the Economic Survey 2023-24 said.

The Economic Survey 2023-24 has revealed generation of productive employment as one of the key policy areas. It said: “Productive jobs are essential for growth and inclusion. India’s labour force is estimated at nearly 56.5 crore, of which over 45 per cent are employed in agriculture, 11.4 per cent in manufacturing, 28.9 per cent in services and 13.0 per cent in construction.”

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While the services sector remains a major job creator, the construction sector has recently become increasingly prominent, driven by the government’s infrastructure push. However, as construction jobs are largely informal and poorly paid, there is a need for opportunities for the workforce to transition out of agriculture. Meanwhile, job creation in manufacturing has been subdued over the past decade due to the legacy of bad loans and appears to have recovered since 2021-22, the report said.

The Economic Survey 2023-24 also said that 65 per cent of India’s rapidly growing population is under 35 and many lack the skills that a modern economy needs. Estimates show that around 51.25 per cent of the youth are considered employable. In other words, around one in two is not immediately employable, right after graduation. However, it should be noted that the percentage has improved from around 34 per cent to 51.3 per cent in the last decade.

While the services sector remains a major job creator, the construction sector has recently become increasingly prominent, driven by the government’s push for infrastructure. However, as construction jobs are largely informal and poorly paid, there is a need for opportunities for the workforce to transition out of agriculture. Meanwhile, job creation in manufacturing has been subdued over the past decade due to the legacy of bad loans and appears to have recovered since 2021-22, the report said.

The Economic Survey 2023-24 also said that 65 per cent of India’s rapidly growing population is under 35 and many lack the skills that a modern economy needs. Estimates show that around 51.25 per cent of the youth are considered employable. In other words, around one in two is not immediately employable, right after graduation. However, it should be noted that the percentage has improved from around 34 per cent to 51.3 per cent in the last decade.