Your boss got a raise, did you? Economic Survey 2025 highlights India’s wage stagnation

Corporate India is raking in record profits, but wages have failed to keep pace, creating an uneasy gap between capital and labour, according to the Economic Survey 2025. 

While profits soared to a 15-year high, employment growth and wage hikes have lagged, raising concerns about income inequality and its long-term economic impact.

The Survey, tabled in Parliament by Finance Minister Nirmala Sitharaman, underscores that understanding corporate profitability alongside wage distribution is crucial for assessing productivity, competitiveness, and sustainable growth.

The numbers tell a clear story:

• Corporate profitability soared to a 15-year peak in FY24, fuelled by robust growth in financials, energy, and automobiles. Among Nifty 500 companies, the profit-to-GDP ratio surged from 2.1 per cent in FY03 to 4.8 per cent in FY24, the highest since FY08.
• While profits climbed 22.3% in FY24, employment grew by just 1.5%, exposing a widening disconnect between corporate earnings and workforce expansion.
• SBI analysis of 4,000 listed companies found revenue growth at 6%, while employee expenses rose only 13%—down from 17% in FY23, signaling a corporate focus on cost-cutting over hiring and wage hikes.
• Despite stable EBITDA margins of 22% over the past four years, wage growth has remained sluggish, particularly at entry-level IT positions, highlighting a broader trend of wage stagnation.
• The Survey warns that if wages don’t grow, consumer demand will suffer, ultimately slowing down the economy.

"While the labour share of GVA shows a slight uptick, the disproportionate rise in corporate profits—predominantly among large firms—raises concerns about income inequality. A higher profit share and stagnant wage growth risk slowing the economy by curbing demand. Sustained economic growth hinges on bolstering employment incomes, which directly fuel consumer spending, spurring investment in production capacity."

Simply put, corporations can’t grow indefinitely if the workforce doesn’t have enough purchasing power.

The Survey draws a parallel to Japan’s post-World War II economic strategy, where a deliberate balance between corporate profitability and worker earnings played a key role in long-term stability.

"Japanese workers, consumers, and retirees all subsidised industrial development by overpaying for goods and services, by taking home a lower share of national output than their counterparts in the West, and by using a financial system designed to transfer purchasing power from households to businesses. Japanese companies returned the favour by upgrading the country’s manufacturing base, passing along productivity gains to workers, and refraining from excessive executive pay, while the government invested in top-tier infrastructure."