Global brokerage and research firm Jefferies analyzed BSE 500 companies for employee cost trends. For FY22, employee costs grew 14% year-on-year (YoY) to ₹10 trillion, 9 ppt faster than FY21. FY22 employee cost trend analysis for BSE500 cos shows a broad recovery, led by tech sector.
Employee cost growth exited the year at an 13% YoY growth in the fourth quarter (4Q). Information Technology or IT, with 20% growth, was the key driver; while banks and consumer with stable at ~7-8%. No sector had a decline, the note stated.
“Annual reports of around100 companies shows head count up 12% (4% ex-IT). An analysis of employee cost trends by company size (revenue based) shows that the employee cost growth across the Top-400 companies is now approximately at the same pace, unlike the large mismatch between larger and smaller cos in FY21,” highlighted Jefferies. Employee cost growth has picked up in smaller companies as well but full trickle down has not happened yet.
Robust tech hiring has been the key driver for jobs in FY22. The IT industry hiring level in FY22 were more than thrice the historic trend and the big driver of formal jobs growth. FY22 was also a strong year for Indian startups with a record 44 unicorn creation.
The startup activity could decline now. IT hiring could still be robust given c.10% revenue growth outlook, though US economy dependence is high, it added.
Further, the govt's quarterly survey of urban employment shows that unemployment rate as of March 2022 was at a 9-quarter low of 8.2%, as urban contact services picked up post covid.
The Naukri jobspeak index for April & May 2022 has continued to stay strong and was up 40% YoY for May22 /7% 3-Yr CAGR. Data trends from other indicators such as EPFO payroll for April also remained strong with highest ever net enrollment. “We see this more as a trend of formalization than actual job creation, though it still implies improving employment conditions,” Jefferies added. The report also suggested that rural wage growth has continued to stay sluggish, and is currently below inflation.
