A surge in engineering and university education over the past two decades has reshaped India’s job market, ending up compressing the salary gap between office jobs and skilled labour, veteran investor and 3P Investment Managers’ Prashant Jain said.
During a conversation with Moneycontrol’s The Wealth Formula podcast, Prashant Jain said, “What has happened in India is that the number of university graduates has exploded in the last 20 years. While the number of jobs has grown, it has not kept pace with the increase in supply. This has naturally led to slower growth in white-collar salaries.”
At the same time, the dynamics for blue-collar workers have moved in the opposite direction, said Prashant Jain.
“The demand for blue-collar workers has grown, while the supply has not kept pace. So, in a way, blue-collar wages have accelerated toward white-collar wages,” he added. “You can view it as a positive development - more people are being educated and employed, but it also highlights the need for better job creation in skilled sectors.”
Shifts in Consumption Patterns
Prashant Jain linked the labour market shifts to broader changes in India’s consumption patterns, particularly after the pandemic. The rapid rise of digital adoption and the popularity of consumer loans have transformed how households spend.
“EMIs have become extremely popular, even for small-ticket items. People who might have bought a feature phone before are now purchasing expensive smartphones on EMI. This has effectively preponed consumption,” Jain said.
However, this surge of easy credit has led to an increase in household leverage, which has temporarily slowed consumption as families adjusted to higher monthly outflows, said Prashant Jain.
“Over the last year, RBI’s tightening of unsecured credit has helped moderate this leverage,” Jain added. “Financial liabilities as a percentage of GDP have moved back. So, I think consumption should gradually come back.”
Jain also noted a shift in what Indian consumers are spending on. Traditional big-ticket items such as automobiles have seen a relative decline in demand while spending on health, education, electronics and experiences are on the rise.
“When we take a holistic look, consumption is doing reasonably well,” Jain concluded.
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