India Inc’s wage bill rises at slowest pace in seven years

Staff costs for India’s listed companies—excluding state-owned enterprises and financial firms—rose at the slowest pace in seven years, increasing only 7.7% in FY25, as companies across sectors tightened overheads to protect margins amid a broader economic slowdown.

According to the Reserve Bank of India’s October Bulletin, staff costs for non-government, non-financial (NGNF) companies grew 7.7% in FY25, marking the weakest growth since FY18, excluding the pandemic year.

Employee cost of non-govt, non-financial  companies

Year	Increase in staff cost %
FY17	8.7
FY18	7.5
FY19	10.6
FY20	8.1
FY21	0.3
FY22	16.0
FY23	16.6
FY24	9.2
FY25	7.7

Source: RBI Bulletin

Overhead expenses, which had remained nearly flat at 0.3% in FY21, surged by about 16% annually in the following two years before moderating to 9.2% in FY24 and easing further in FY25.

Aggregate revenues for the sample companies increased 7.2% in FY25, up from 4.7% in FY24, while net profits surged 18% in FY24 and grew another 18.9% in FY25, indicating continued efficiency gains despite slower cost escalation.

Over the last decade, staff costs have recorded double-digit growth in only three financial years. The wage bill grew 10.6% in FY19, but weak domestic demand and sluggish private consumption in FY20 led to a slower 8.1% growth, while the pandemic further curtailed expansion.

With pent-up demand fading, activity normalising and commodity prices easing, corporate sales growth moderated to 4.7% in FY24 after a high-base period, before improving to 7.2% in FY25, supported by gains across major sectors.

Expense growth among listed NGNF companies broadly mirrored sales trends, both at the sectoral and aggregate levels. However, total expenditure contracted at a sharper pace than sales, primarily due to a decline in raw material costs and a notable slowdown in staff cost growth.

Among firms, large corporates remained the primary contributors to overall profitability, consistently achieving higher operating margins than medium and small enterprises. Deleveraging and stronger profits enhanced debt serviceability across all firm sizes.

While medium and small companies showed improved repayment capacity, large firms continued to drive the overall debt-servicing metrics for listed private non-financial corporates.

For large-sized companies, the leverage ratio (debt-to-equity) improved to 94.0% in FY25 from 139.2% in FY20, while for the remaining firms, it declined to 66.1% in FY25 from 115.2% in FY20.

It is also noteworthy that the sample size has expanded by nearly 900 companies over the past seven years, bringing the total coverage to 3,902 companies in FY25.