Wage increases in India are likely to sober over the next two to three years due to: rising labour supply, low new-job creation, relative preference for capital over labour and less inflationary policies, said a report from Kotak Institutional Equities.

Pointing out that India’s ballyhooed demographic dividend is under threat, the report questions whether India will be able to create enough jobs for the rising population.

"It is unlikely that India will create 150 million new jobs over the next 10 years, even as an estimated 240 million people enter the job market. India has added a mere 15 million jobs in the past seven years", the report mentioned.

The report futher stated that, "this mismatch between supply and demand is likely to put a downward pressure on wages. The caveat of course is that right skills will be paid well, while low-skilled jobs will face the maximum pressure. There is also a rising trend towards automation which could hurt job creation."

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