‘Job situation in manufacturing was terrible even before pandemic’
Mahesh Vyas of CMIE says the growth in the wage bill of listed manufacturing companies is negative when adjusted against inflation
The wages, however, climbed to Rs 570 billion in the December quarter of 2020 and further Rs 600 billion in the three-month period to September 2021.
The Covid-19 and the lockdown imposed to fight the pandemic made an already “terrible employment situation” in the manufacturing sector much worse, writes Mahesh Vyas, MD & CEO of Centre for Monitoring Indian Economy (CMIE).
In a column published in the Business Standard, Vyas analyses the growth in wage bill of listed manufacturing companies to understand the job scenario in the sector. The wage bill saw a sharp contraction in the June quarter of 2020, he writes, adding that the period also saw severe lockdown.
Growth in wage bill of manufacturing firms
He notes that wages had shrunk by 8.4% over the previous quarter and by 9.2% over the year-ago quarter. However, adjusted against inflation, the YoY decline in manufacturing sector wages is a big 14.8%.
Vyas further says growth in wages in manufacturing began weakening from mid-2018-19. In one year since then, and well before the pandemic and the resultant lockdowns hit business, real growth in manufacturing wages had started falling into the negative zone.
Real wages shrank by 2.8% y-o-y in the quarter of September 2019, then by 3.6 % in the quarter of December 2019 and 5.3 % in the quarter of March 2020, according to the study by Vyas.
“The pandemic only made a terrible employment situation in the manufacturing sector much worse,” he says.
Real wage bill of manufacturing firms declined by 2.7% in 2019-20. Then, in the pandemic year of 2020-21, it further declined by 3.9%.
Real wages grew by 10.4% and 6.8%, respectively, in the first two quarters of 2021-22, registering recovery.
Stagnant nominal wage bill
Analysing the nominal wage bill of manufacturing companies in absolute numbers, he says jobs in manufacturing must have fallen during and before the pandemic.
He notes that the nominal wage bill was stagnant at around Rs 530 billion for two years, from the September quarter of 2018 through the same period in 2020. It in fact declined to Rs 485 billion in between June quarter of 2020.
The wages, however, climbed to Rs 570 billion in the December quarter of 2020 and further Rs 600 billion in the three-month period to September 2021.
The growth since 2019 is modest, at about 6% per annum, Vyas says, adding that the growth since 2018 works out to only 4% per annum.
“Either way, the growth in the wage bill of listed manufacturing companies is negative in real or inflation-adjusted terms even after the recent recovery.”
Published: November 23, 2021, 16:48 IST
Download Money9 App for the latest updates on Personal Finance.
