Income levels of salaried class in India have stagnated in recent years

Real wages for salaried jobs in India stagnate due to lack of demand, skills, and investment, impacting economic growth.

Last week, Niti Aayog member Arvind Virmani said in an interview that while employment is increasing, real wages for regular salaried jobs have not kept up with inflation over the last seven years. Real wages refer to the income a worker earns that is adjusted for inflation. They reflect actual purchasing power.

An analysis of the earnings data for salaried workers, casual labourers, and self-employed persons from Periodic Labour Force Survey (PLFS) reports shows that when adjusted for inflation, wages for salaried workers in India have stagnated since 2019.

Real wages for salaried jobs

Real wages for salaried jobs were 1.7% lower in the 2024 June quarter (latest data available) compared to the pre-pandemic 2019 June quarter. Chart 1 shows the wages earned by salaried workers, adjusted for inflation. The workers’ real wages increased by 2% in June 2020 compared to the same quarter the previous year. But they dipped again by 6% in June 2021 and by 1% again in June 2022.

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Anamitra Roychowdhury, Assistant Professor at the Centre for Informal Sector and Labour Studies, says that stagnation in the growth of real wages for salaried workers is “concerning” because there is more supply of labour than demand. “The returns to higher education are declining. People are overqualified for the jobs they have. So while there is growth in employment numbers, well-paying jobs are not available. It is a question of the quality of employment,” he says.

Mr. Virmani cited the lack of skills as the main reason for wages not keeping up with inflation. He said skill development is needed at every level of education and for all kinds of jobs.