Enactment of new labour laws has significantly impacted corporate employee costs and profitability, says RBI

Reserve Bank of India (RBI) stated in its latest monthly bulletin that in the organised sector of India, staff cost growth accelerated for manufacturing as well as services sector on a y-o-y basis during Q2 and Q3 of 2025-26. The enactment of the new labour laws has significantly impacted corporate employee costs and profitability. Majority of top 500 non-government non-financial (NGNF) listed companies made provisions towards gratuity and other social obligations mandated by these laws as an exceptional item in their financial results for Q3:2025-26. Consequently, employee cost growth (including provisions reported under exceptional items) surged significantly on a y-o-y basis while net profit contracted. Sector-wise, manufacturing companies have made the highest provisioning led by automobiles, pharmaceuticals, chemicals, and electrical machinery.