TeamLease CFO disagrees with CEA, says pay hikes haven’t declined except in one area – CNBC TV18

Chief Economic Advisor V Ananth Nageswaran had last week said corporate wage hikes were not in line with inflation. But Ramani Dathi, chief financial officer, TeamLease Services, one of India’s largest staffing firms, believes that except in the IT sector, there has been no major decline or inconsistency in salary hikes seen in the corporate sector in the last few years.

“Salary inflation for the three million employees across our roles has consistently been between 6% and 8% year-on-year. Only for IT in the last one and a half years, it has slowed down by 2-3%,” Dathi told CNBC-TV18 on December 12.

He pointed out that the slow wage growth for techies was an improvement on the massive increases offered during two years of the COVID-19 pandemic.

At an event on December 5, the CEA said: “While the profitability growth of corporates has been absolutely impressive, the truth is that the corporate sector has never grown so well in the last four years despite the challenging environment. “However, as employee compensation has weakened, corporates have used profits to reduce debt.”

Asked whether any fiscal or monetary policy intervention was needed at this point to improve employee wages and hiring practices, Dathi said, adding that it was not needed.

Also read: Corporate profits increased 4 times in 4 years, but did salaries increase? CEA’s message to India Inc.

He reiterated that wage inflation has remained consistently at 6% to 8% over the last few years. Even in the last four-five quarters, there has been a good pace of new job creation except in IT.

“Many of these jobs are shifting from informal sectors to formal sectors, which is good, as their access to PF contributions, insurance and other social security benefits will improve.”

He said TeamLease has been consistently adding around 20% net new employees year-on-year across all sectors including BFSI, FMCG, FMCD and Pharma. Currently, manufacturing is the fastest growing sector for staffing firms. “We are very positive about the outlook.”

In contrast, CEA Nageswaran has suggested that corporations need to make India synonymous with quality and hence, it is time for them to create a good combination of employment and capital expenditure. “We need to think bigger because the global environment is going to be extremely ineffective… So, we need to create a compact within the country to hire and skill our people better. Corporates need a better balance between the share of profits going to workers and capital expenditure,” he said.

Separately, TeamLease CFO shared that the firm is evaluating merger and acquisition opportunities in HR tech and those in the pipeline are small in size, and less than ₹50 crore. The company is also looking at employee salary and expense opportunities.

Also read: IT revival far from peak, new recruitments in the sector slow: Naukri.com