Real Wage Growth:
National Sample Survey Office (NSSO) published Periodic Labour Force Survey (PLFS)
Real wages grew at a slow pace of 0.7% in Q1 of 2024-25.
This marked an improvement over the previous 24 quarters, which saw an average contraction of 1.6%.
Growth is expected to accelerate in the remaining quarters of 2024.
Accelerated growth could boost personal consumption.
Uneven Growth:
Regular and salaried workers Saw a mere 0.4% increase in real wages.
Rural workers Experienced a 0.9% decline in wages.
Self-employed workers Saw a 0.7% decline in wages.
Casual labourers Saw a 2.4% increase in real wages, the fastest in seven quarters.
Deterioration in Job Quality:
The proportion of self-employed workers increased to the highest level of 57.7%.
The proportion of casual labourers declined to the lowest level of 19%.
The share of regular wage or salaried workers remained largely stagnant.
Urban-Rural Wage Differential:
The urban-rural wage differential reduced to a four-quarter low in Q1.
The differential is expected to reduce further in the remaining quarters of 2024.
Impact on Personal Consumption
An improvement in real wages could provide impetus to personal consumption demand.
Urban consumption is weakening, despite a healthy monsoon and robust farm output.
Personal consumption is a critical engine for growth and private investments.
Private final consumption expenditure grew at a weak 4% in 2023-24.
Government's Perspective:
The government believes that the decline in urban unemployment and improvements in rural incomes have contributed to consumption growth.
The government acknowledges some signs of weakness, such as the decline in automobile sales.
The government is monitoring the growth of fast-moving consumer goods sales in urban areas.
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