Real wage growth to improve further in H2 of FY25: Report
Real wage growth is expected to improve further in the remainder of FY25, driven by a favorable base effect, moderating inflation, and progress in agricultural activity due to an above-normal monsoon, according to an analysis by India Ratings and Research (Ind-Ra).
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The average real wage growth was steady at 0.7% year-on-year during the first quarter of the current financial year. The analysis is based on the data from the Periodic Labour Force Survey (PLFS).
Across categories, the growth in real wages of casual labourers was the highest at 2.4% y-o-y in the first quarter of this financial year, marking a seven-quarter peak. Next was regular wage/salaried workers with a marginal increase of 0.4%. For self-employed workers, it declined by 0.7%.
Urban areas recorded a higher real wage growth of 0.7% y-o-y, compared to a 0.9% decline in rural areas in the first quarter of 2024-25. However, the wage gap between urban and rural areas has narrowed.
«The urban-rural wage differential reduced to a four-quarter low of 1.74x in 1QFY25 and is expected to reduce further in the rest of FY25,» said said Paras Jasrai, senior analyst at Ind-Ra. For self-employed workers, the ratio was 1.74x, the lowest since the first quarter of 2023-24. It was at a seven-quarter low at 1.26x for casual labourers while regular wage/salaried workers maintained a flat ratio of 1.47x in the first quarter of 2024-25.
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