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A new government survey has fueled controversy throughout India's corporate world, revealing a dramatic gap between record company profits and flatlining employee wages. While Indian companies recorded record profits in the previous financial year-reaching a 15-year high-wages for workers have significantly fallen behind, particularly for salaried and entry-level employees.
Key Findings from the Survey
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Corporate Earnings vs. Wages: Economic Survey 2025 points out that, though Indian firms have had strong EBITDA margins of 22% in the last four years, wage increases have been flat. This divergence is most critical among salaried workers, especially those with entry-level positions in IT.
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Stagnant Wage Growth: Though casual workers have witnessed some real wage growth, the middle-class salaried segment has witnessed near zero real growth in the past few years, experts say.
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Impact on Economy: The survey cautions that this mismatch is poised to slow down consumer demand, which is critical for long-term economic growth. "A rising profit share and flat wage growth pose the risk of slowing the economy by dampening demand," the report says.
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Worker Sentiment: These results are repeated in independent surveys. In accordance with ADP's People at Work 2023 report, 44% of Indian workers believe they are underpaid and 43% experience regular instances of incorrect payment.
Government's Call to Action
Chief Economic Advisor V Anantha Nageswaran has appealed to Indian businesses to "balance capital and labour," highlighting that more equitable income distribution is not merely a matter of equity but also of catalysing consumption and sustainable business growth. The survey relies on global precedents, including post-war Japan, to highlight that distributing productivity gains to workers can fuel both social stability and economic growth.
What Needs to Change?
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Transparent Pay Policies: It is advisable for firms to have transparent and uniform remuneration policies, with systematic audits to detect and rectify imbalances.
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Inflation-Indexed Wages: Tying initial salaries to inflation may encourage and retain higher-quality people and improve productivity.
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Tax and Policy Reforms: Lowering income tax and simplifying GST have been suggested in order to enhance formalization and improve take-home pay.
The Bottom Line
The numbers are clear: as Indian companies prosper, most workers are left behind. Closing the wage-profit gap is now regarded as essential-not merely for equity, but for India's economic drive.
Sources: Financial Express, Times of India, Hindustan Times, CNBC TV18, Economic Times
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