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Cos down bitter wage pill as gigs turn sweeter

By Sohail Khan 26 August 2026, 5:00 am

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Business News›Careers›Freshers›Minimum wage hikes add to cost pressures for retailers and gig firms ahead of festive season

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Minimum wage hikes add to cost pressures for retailers and gig firms ahead of festive season
Synopsis

Companies employing lower-paid and gig workers are facing higher labour costs after more than 15 states raised minimum wages since April, adding pressure ahead of the festive season.

swiggy-executive- — Companies are already grappling with higher commodity prices and freight rates, along with rupee depreciation.

Kolkata|Bengaluru: Companies employing lower-paid and gig workers, from retail shop-floor staff and delivery partners to factory and warehouse workers, are facing a fresh cost squeeze as they prepare for the festive season, with more than 15 states increasing minimum wages since April.

This comes as a double whammy as companies are already grappling with higher commodity prices and freight rates along with rupee depreciation, senior executives at Eternal, Swiggy, V-Mart Retail, Vishal Mega Mart, Delhivery and Amber Enterprises told analysts recently. Several companies across retail, ecommerce, logistics and manufacturing felt an impact on margins in the June quarter, which they expect will continue till business volumes pick up in the festive season.

Karnataka increased minimum wages by up to 60% effective May 22, taking the unskilled wage in Bengaluru to Rs 23,376 a month from around Rs 14,600 earlier, while Haryana, Punjab and Telangana have raised the unskilled wage floor by 35%, 18.4% and 9.8%, respectively, this year. Most other large states have recorded single-digit increases. Albinder Singh Dhindsa, chief executive of Eternal, which owns food and grocery delivery platforms Zomato and Blinkit, said the cost of doing business increased in the June quarter as several states raised minimum wages.

ET Bureau

Companies protest steep hikes

At rival Swiggy, group chief financial officer Rahul Bothra said annual salary revisions in April-June along with minimum wage increases in some states, affected contribution margins. The impact was particularly visible in warehouse and dark-store picking and packing costs. Swiggy’s sequential contribution margin declined 20 basis points in the last quarter.

ALSO READ | FMCG, auto and consumer companies step up festive marketing spends by up to 20%

One basis point is one-hundredth of a percentage point.

An ET analysis shows employee benefit costs in the April-June quarter rose 45% year-on-year at Eternal, 17% at V-Mart Retail, 64% at V2 Retail and 21% at Delhivery—well above the usual pace.

At Vishal Mega Mart, employee cost increased about 13% year-on-year on a per-square-foot basis. To be sure, expansion and hiring too had a role in this increase. Companies have protested the steep hike in minimum wages in some states. In Karnataka, employer associations have even moved the High Court, but the court has not granted an interim stay.

Companies are, therefore, implementing the revised rates, amid concerns over potential penalties for non-compliance. “Minimum wages have a bigger impact as there is no contractual pass-through clause,” Delhivery CFO Vivek Pabari said. Fuel-cost increases, by contrast, have some contractual pass-through, offering some cushion in margin protection.

The logistics firm’s gross margin took a sequential hit of about 300 basis points in the June quarter. Its Tauru facility in Haryana and Hoskote facility in Karnataka were particularly affected. The company has begun revising prices across client contracts to pass on the increase in wage bill, a process it expects to continue through the second quarter. It expects full-year margins to remain in line with its cost measures and stronger business in the second half.

Alok Agrawal, partner at Deloitte Touche Tohmatsu India LLP, said state-level wage revisions are continuing even as the Centre is yet to notify the floor wage under the wage code. The statutory bonus calculation amount has also not been revised, he said.

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