Why govt's chief economist is batting for your salary growth
Anantha Nageswaran has pointed out that listed companies are making higher profits but they are paying less to their employees. Nageswaran nudged the private corporate sector to hire more and find the “right balance between capital-intensive and labour-intensive growth”, underling that while profits of listed companies--as a percentage of GDP--hit a 15-year high in 2023-24, their wage cost increase decelerated.
Without a judicious balance between the share of corporations’ income making up their profits and that going to workers as wages, there won’t be adequate demand in the economy for companies’ own products to be bought, the CEA said at an event a few days ago. Sustained income growth bolsters both consumption and savings, eventually spurring economic expansion. “In other words, not paying workers well or not hiring workers enough will end up being actually self-destructive or harmful for the corporate sector itself and for small enterprises,” Nageswaran said, stressing that even legendary economist Adam Smith had written The Theory of Moral Sentiments before his seminal work--The Wealth of Nations.
“The most important ingredient of long term growth and consumption is to ensure employment income growth and, thus, spending power growth. Otherwise, it will become a mutually self-destructive cycle,” the CEA said.
Profits of the Nifty-500 companies touched 4.8% of GDP last fiscal, the highest since the 5.2% increase in the boom year of 2007-08 (before the global financial crisis), according to a Motilal Oswal
