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Employment growth in Indias organised sector could recover in FY27 as improving corporate revenue growth supports hiring, while discretionary consumption categories such as automobiles, consumer durables and travel are expected to outperform broader consumption trends, according to a research report by Jefferies.
The report, based on an analysis of around 2,200 listed companies employing 10.4 million people, said job creation slowed in FY26, although wage increases improved modestly. A recovery in hiring and consumption will, however, depend on revenue growth, while a weak monsoon and the fading impact of goods and services tax (GST) benefits could pose headwinds. Organised sector job creation slowed to a five-year low of 1.8% YoY in FY26 as hiring moderated across most sectors, particularly financials, Jefferies said in its report. The brokerage highlighted a link between corporate revenue growth and employment additions. Companies outside the financial sector that recorded revenue growth of more than 20% in FY26 saw headcount rise by 9.1%, compared with 4.4% growth among companies whose revenue increased by 10-20%. With revenue growth expected to improve in FY27, hiring could also recover, the report said. Financial services remained the largest employer among listed companies, accounting for around 28% of their workforce and employing 50% more people than the information technology sector. However, hiring growth in financial services slowed to 1.7% in FY26, while IT employment growth remained subdued. On wages, Jefferies estimated that like-for-like annual salary hikes improved to 9.4% in FY26, despite slower headcount additions. Total employee costs rose 6.8% year-on-year to around Rs 13.5 lakh crore, according to the report. Looking ahead, the report said the implementation of the 8th Pay Commission, expected in late FY28, could support discretionary spending through higher government salaries and arrears effective from January 2026. Overall, we expect discretionary consumption items (autos, consumer durables, travel, etc) are likely to outperform broader consumption trends, Jefferies said. The outlook remains subject to risks, including the fading boost from GST cuts and the possibility that weaker monsoon conditions could weigh on consumption and hiring momentum. (ANI)
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