• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Brand Quest
• The New Manager
• BL Club
• Smartbuy
• Books
• Gallery

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth
• Events 2007

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Aarati Krishnan

Wage bills in the private sector are upward bound once again, but the increases are well below the levels seen in the boom years.

Latest results show the employee expenses of 300 leading private sector companies rising by 8 per cent in the first half of 2008-09 over the same period last year.

That is far below the increases of 20 per cent-plus witnessed in 2007-08 and 2006-07. However, employee expenses saw a sequential improvement after shrinking in the March quarter of this year.

This analysis takes into account 300 leading private sector companies in the CNX 500 universe which have announced results for the September quarter.

Over two-thirds of the companies considered for this analysis witnessed a rise in employee costs in the April-September 2009 period, suggesting that the trend of recovery was fairly broad-based. Higher employee expenses could be indicative of companies either hiking pay packets for their staff or adding to their workforce.

Companies were conservative in adding to their wage bill, as the increase in employee costs lagged that of their operating profits by a sizeable margin. Operating profits for the 300 companies registered an 18 per cent increase in the first half of this fiscal, while employee costs rose at less than half this rate.

Another interesting aspect to be noted is that sector-wise trends in employee costs during the first half closely tracked profit growth. Companies in sectors such as infrastructure, cement and automobiles, that saw the maximum increases in employee costs (15-20 per cent) for the half-year, were the ones that managed a sharp expansion in their operating profits (40-80 per cent) as well.

In contrast, the few sectors that saw employee expenses remain flat or drop – realty and steel, for instance – were grappling with steep profit declines in these six months. Large software companies, which have the biggest wage bills, saw employee expenses rise 6.2 per cent for the half year; while their operating profits grew 26 per cent. A portion of their employee costs may also be captured in the selling and administrative costs, not considered for this analysis.

Quarterly trends in employee expenses show that they tend to follow trends in corporate profits. After growing at a fast clip until the September quarter of 2008, employee expenses of companies began to flatten out in the December 2008 quarter and actually shrank (2.6 per cent) in the March 2009 quarter.

The June quarter saw a sequential improvement of about 4 per cent in the total wage bill, followed by another 3 per cent expansion in the latest September quarter.

More Stories on : Corporate | Human Resources

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Copyright © 2009, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line