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LATEST NEWS UPDATES | Factory workers in India -CP Chandrasekhar and Jayati Ghosh

Factory workers in India -CP Chandrasekhar and Jayati Ghosh

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published Published on Aug 26, 2018   modified Modified on Aug 26, 2018
-NetworkIdeas.org

Recent data from the Annual Survey of Industries, covering up to 2015-16, provide some interesting insights into the changing nature of industrial employment in India. In the decade up to 2015-16, there was a significant increase in the number of factory workers, by around 40 per cent. This expansion can be dated from around 2005-06 onwards and especially up to 2011-12. This is to be expected, given that that was the period of India’s economic boom, in which both construction and manufacturing industry showed higher rates of investment and output growth.

While the aggregate numbers still remain low for an economy of India’s size and ambitions, such an increase in doubtless to be welcomed. Figure 1 indicates the annual pattern of aggregate employment of workers and other salaried employees in the factory sector. There is no doubt that there is a trend change in the number of workers after 2005-06, while the increase in the number of salaried employees has been more muted.

However, it is clearly the case that, despite such increases in employment, wages of workers have not kept pace with productivity increases in the factory sector. This is evident from Figure 2, which shows a significant medium-term decline in the share of wages to (net) value added, from 25.6 per cent in 1990-91 to as low as 10.6 per cent in 2007-08. This would have been one of the lowest such ratios among both emerging markets and advanced economies. The subsequent slight recovery in recent years, to values of just above 14 per cent, still point to a very substantial decline in wage share compared to the 1990s.

This decline in wage share is similar to – albeit significantly sharper than – the decline experienced in most other countries in the era of globalisation. But the Indian case is one of declines from an already relatively low base, which makes it all the more critical.

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NetworkIdeas.org, 14 August, 2018, http://www.networkideas.org/featured-articles/2018/08/factory-workers-in-india/


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