Broader cost pressures persist
The increase in employee expenses comes alongside the increase in input and financing costs. Volatility in commodity prices – particularly energy and raw materials – has kept production costs high, while borrowing costs remain high despite the start of monetary easing.
This combination has created a multi-layered cost challenge for companies, limiting their ability to protect margins.
Boundaries under strain
With costs rising across the board, companies are witnessing margin compression. While some firms have attempted to pass on higher costs through price increases, weak or uneven demand has limited full pass-through.
Consumer-facing sectors, in particular, are seeing pressure as higher prices begin to affect volumes, forcing companies to absorb some of the cost increases.
The impact of rising employee costs varies across sectors. IT and services firms, where labor is a key cost component, have seen sharper growth. Manufacturing companies, while more exposed to input costs, are also experiencing higher wage bills due to capacity expansion and utilization.
Meanwhile, startups and digital businesses continue to experience high employee costs as they invest in growth and innovation.
