Wages, benefits to grow in line with rise in corp profits

The four new labour codes will ensure that wages and benefits of workers grow in line with rise in corporate profits, says chief economic advisor V Anantha Nageswaran.“The important thing is that labour codes also make it very clear that there has to be a balance in terms of the worker’s rights and what the employers have been asking about. Labour codes will also do its own bit to make sure that wage growth and the benefit growth is commensurate with profitability growth. That is an important development that has happened since we wrote the survey last year,” he says, responding to a question over the ‘profit-wage gap’, highlighting the contrast between robust corporate returns and sluggish employment gains, especially at the entry level.In last year’s Economic Survey, Nageswaran had mentioned that corporate profitability had soared to a 15-year peak in FY24, while wages and employment lagged. Nageswaran says “data are encouraging” to suggest that the trend might have reversed now.The Survey says the new labour codes hold particular promise for boosting female participation in labour force, enhancing employment and formalisation, spurring inclusive growth and productivity, amid India’s demographic dividend.“(These) can lead to a reduction in UR (unemployment rate), bringing it down to 1.9- 2.9% and generating nearly 77 lakh jobs. (Also, they) would increase the disposable income of workers and has the potential to boost consumption by approximately Rs 75,000 crore, in turn enhancing economic growth.”