Manufacturing sector salaries jump 10.2%

Pay hike records the biggest ever rise in last 5 years.

Reflecting the optimism in terms of sales and net profit growth, the manufacturing sector hiked the salaries and wages of its employees by 10 per cent in 2003-04.

This is the biggest rise in the last five years. Between 1999-2000 and 2002-2003, salaries in the manufacturing sector increased between 3.81 per cent and 6.59 per cent per annum.

This study is based on the figures reported in the annual reports of 1,200 companies in the manufacturing sector.

But still, salaries did not grow in line with the increase in sales and profits of the manufacturing sector. While the pre-tax profits of the sample increased 48.79 per cent in 2003-04, the salary bill increased only 10.20 per cent.

Thus, salaries as a percentage of sales declined from 6.54 per cent in 2002-03 to 6.24 per cent in 2003-04. This ratio was higher at 7.13 per cent in 2001-02.

The more liberal employers in the manufacturing sector in 2003-04 were in sectors such as chemicals, machine tools, pesticides, dyes and chemicals, steel, bearings, auto mobiles ancillaries and commercial vehicles.

The chemicals sector increased its staff's salaries by 40.31 per cent in 2003-04 out of a 160 per cent rise in net profits. Salaries of pesticides manufacturing companies increased 38.1 per cent on a 67.7 per cent rise in net profit.

Steel companies increased their staff salaries by 24.1 per cent on the back of a 528.6 per cent rise in net profit.

The best paymasters of the yesteryears are cutting their staff costs . The shining example is the fast moving consumer goods sector, where companies are facing the heat of the demand recession and competition.

The salaries in the personal care sector declined by 3.33 per cent in 2003-04 as their net profit increased by 6.88 per cent.

With the multinational pharma companies cutting down employee strength, the growth rate in salaries of pharma companies declined from over 20 per cent in the previous two consecutive years to 15.9 per cent.

The salaries and wages in the paint industry declined 4.50 per cent and that of white goods companies declined 20.2 per cent. Cotton textiles firms continued to axe staff costs to preserve their internal accruals.

The salaries of cotton textiles firms declined 4.76 per cent in 2003-04 and had declined by 2.55 per cent in 2002-03.