Growth in net sales of 3,057 non-finance companies in the June quarter was 22.18 per cent year-on-year, according to a Business Standard analysis of the numbers from the Centre for Monitoring Indian Economy. To be sure, salaries need not keep pace with earnings, and are dependent on factors including the demand and supply of labour as well as the future earnings outlook.  

But the current trend on lower salary growth amid an earnings surge has the chance of extending over a longer horizon, according to experts citing technological changes and lower certainty on earnings. 

Salaries in the June quarter went up at less than half the pace at which sales have grown — at less than 9 per cent. 

“I don’t expect that to shoot up,” said market expert Ambareesh Baliga.  

Companies have made some adjustment to their employee costs because of the labour codes, Baliga noted. 

Significant gains in employee compensation may not happen at least in a few quarters, according to him. Rising inflation could be eventually reflected in wages, but the adoption of artificial intelligence (AI) in key sectors may have an impact on the salary increase. 

The adoption of AI over the next two or three years is expected to play out in sectors beyond information technology (IT), according to Baliga.  

The diverging trend holds true across many key sectors. Sales growth was higher than the increase in salaries and wages in manufacturing companies and electricity firms. The starkest contrast was in the mining sector, where sales grew 40.83 per cent and salaries and wages 1.04 per cent. 

Lower growth in wages has likely he­lped operational profits, where margins had come under pressure because of higher costs of raw materials, said Sanjay Sinha, founder of asset manager Citrus Advisors. The second quarter may also see the momentum in earnings conti­n­ue, according to Sinha. Growth in wa­ges may remain muted, Sinha suggested.  

Mining major Vedanta, which recently split operations into multiple listed entities, recorded a 53.6 per cent increase in operational revenues even as employee costs rose 4.8 per cent. Businesses in which commodity prices and other input costs can be cyclical may see a divergence between changes in employee costs and revenue, according to Vedanta Group chief human resources officer Neha Sharma. “This year, Vedanta has implemented above-market increments and bonuses, alig­ned with the company’s performance. While we continue to hire across businesses to support our growth plans, we have been prudent in deploying res­o­u­rces across existing operations to ensure that our growth and revenue momentum are sustained,” Sharma said.