India Inc's wage bill climbs 22% in H1

Talent squeeze, jobs boom fuel fastest rise.

Corporate India has recorded its highest rise in salaries at 22 per cent in the first half of 2006-07. The increase was 17 per cent in 2005-06 and between 8.35 per cent and 12.6 per cent in the previous three years.

The increase, companies say, is due to a shortage of talent and the recent jobs boom.

Despite the phenomenal growth, salaries and wage costs have not grown in line with the increase in sales and profits of the corporate sector.

While the pre-tax profits of 1,900 listed companies increased 36 per cent in the first half, their salary bill rose by 21.94 per cent. Salaries as a percentage of sales declined from 7.04 per cent in the first half of 2005-06 to 6.66 per cent in first half of 2006-07.

The salary bill for service industries like information technology, telecommunications, media, private banks and airlines rose between 30 and 50 per cent this year, mainly due to big hiring in the last two years.

In contrast, manufacturing industries such as engineering, turnkey construction, electronic equipment, pharmaceuticals and personal care have each reported a 20 per cent rise in their salary bills.

Software services companies, which have increased their employee strength by over 150,000 in the last 18 months have reported a 54 per cent increase in their wage bill in the first half of 2006-07. Private sector banks, which have been driving retail growth, reported a 48 per cent rise in their wage bill.

Salaries at airlines rose 93.22 per cent, with Jet Airways recording a wage bill of Rs 454 crore. The wage cost of the retail sector has risen even higher. This segment has reported a 100 per cent rise in its wage bill in the first half of 2006-07.

Media and entertainment companies are paying fat salaries to their employees with the wage bill of news and entertainment providers shooting up 40.5 per cent.

The print media reported a 26 per cent rise in its wage bill. The other service industries that reported wage bills growing by over 20 per cent are hotels, courier and non banking finance companies.

Public sector banks, which follow an industry-wide wage pact brokered by the Indian Banks' Association, have recorded a modest 4 per cent increase in their wage bill.

Steel, fertilisers, multinational pharmaceutical companies, fast-moving consumer goods firms, shipping, automobile ancillaries, farm products and many other sectors that are not generating new employment opportunities have posted modest single-digit growth in their wage bill.