Smart pickup in good jobs

Perhaps, this is one of the best sets of statistics to report. Employment by listed companies crossed the 10-million mark in 2021-22. This is an all-time high. More importantly, listed companies reached this landmark upon having collectively clocked a record 9.3 per cent growth in employment over the previous year’s employment of 9.3 million. These estimates are based on data provided by 3,315 companies in their annual financial statements for 2021-22 and 2020-21.
 

During the previous three years — 2018-19, 2019-20 and 2020-21 — about 3,400 companies had reported total employment of the order of 9.3-9.4 million. In contrast, a slightly smaller set of 3,315 companies reported a higher total employment of 10.1 million. The increase in employment is therefore not merely significant but it also marks a break from the stagnation in employment seen earlier.
 

Listed companies are the best employers and therefore, this big increase in employment by them makes a significant difference to the quality of employment in India. Also, the estimated 0.7 million additional jobs created by listed companies may easily more than offset the recent layoffs seen in tech companies.
 

This increase in employment is quite surprising. It has materialised without any significant growth in net fixed assets. Listed non-finance companies reported a mere 2 per cent increase in net fixed assets during the year ended March 2022. Growth in net fixed assets was a sluggish 4.2 per cent in the year ended March 2021 as well. It remains somewhat sluggish even into 2022-23. Net fixed assets of September 2022 were a mere 6.7 per cent higher than in September 2021. Therefore, the sharp 9.3 per cent growth in employment in the year ended March 2022 is surprising, although it is most welcome.
 

An increase in employment has translated into an increase in the total wage bill of listed companies. Wages paid to labour by the 3,315 companies that provided data on employment increased by 13.6 per cent in nominal terms in 2021-22. This is the highest growth in wages in eight years, since 2013-14. The year-on-year growth in the wages of listed companies accelerated to 15.9 per cent in the June 2022 quarter and by 15 per cent in the September 2022 quarter. This suggests that the lack of growth in assets notwithstanding, wages and therefore possibly employment have continued to grow into 2022-23. CMIE’s Consumer Pyramids Household Survey (CPHS) also reports a pickup in employment in salaried employees in recent months.
 

The 13.6 per cent growth in the wage bill of listed companies (which is based on a sample of 3,315) is also reflected in the growth in the wage bill of a larger set of companies that include unlisted companies in the same year. The wage bill of 8,832 listed and unlisted companies grew by 14 per cent in 2021-22. This is a shade higher than the growth in the wage bill of only listed companies. This implies that unlisted companies have seen a larger growth in their wage bill and, therefore, possibly in their employment.
 

While employment and wages paid to labour increased well during 2021-22, growth in the annual wage rate was sluggish. This grew, on average, by four per cent. Compared to the 1.1 per cent growth seen in 2020-21, the four per cent increase in the annual wage rate pencilled in 2021-22 is an improvement. But the growth is lower than inflation. Inflation-adjusted or real annual wage rate in the listed companies as a whole saw a fall of 1.6 per cent.
 

Inflation-adjusted annual wage rate declined by 3.8 per cent in 2020-21 and by 1.4 per cent in 2019-20. Earlier, in 2018-19, the annual real wage rate had risen by a meagre 0.7 per cent.
 

The fall in real (inflation-adjusted) wages in the past three years may not necessarily imply sluggish growth in wages compared to inflation. It is quite likely that the large increase in new employment witnessed in 2021-22 came in at lower-than-average wages of the older employees. It is quite likely that it was this newer cohort that pulled down the overall growth in wages, which in turn depressed the overall average wage rate below the inflation rate.
 

The average annual wages per employee of these listed companies in 2021-22 was Rs 714,069. The average wages per employee of the same companies in 2020-21 was Rs 683,020. A preliminary examination of this data shows that the average wages per employee is quite stable across broad groups of companies of various sizes by employment. However, companies that employ more than 100,000 individuals have a much higher average wage rate of Rs 1 million.
 

It is useful to contrast the average annual wage rate of over Rs 700,000 per employee in these listed companies with the average wages of a salaried employee as seen in the Annual Survey of Industries (ASI) produced by the Ministry of Statistics and Programme Implementation and as seen in CMIE’s CPHS database.
 

Total emolument per employee of factory employees, according to ASI, was Rs 295,789 in 2019-20. Over the following two years, this may have moved a little higher. According to CMIE’s CPHS, the average salary of salaried employees in 2021-22, at Rs 263,385, was close to the ASI estimate. It is lower because it includes the unorganised sectors that are not included in the ASI estimates.
 

Listed companies pay well over three times the wages paid by other employers — whether the organised factory sector or the unorganised sectors employing salaried workers. An over nine per cent increase in employment in these companies may have implications on demand.