A Comparative Study of Decadal Labour Share for Indian Manufacturing Industries

Abstract

Since the 1980s and 1990s, there have been concerns that many parts of the workforce have not experienced significant improvements in labor market outcomes, such as wages, job security, and working conditions. Many analysts focused on India’s labour markets express apprehension about the slow growth of employments in the organized sector and draws attention to re-investigate the wage productivity gap and the conditions of labour market in Indian manufacturing industries. The major question that we pose in this paper is that: How does labour share and labour share growth trends differ across decades at aggregate level for Indian manufacturing industries? Our comprehension of the wage productivity disparity in Indian manufacturing across decades depends on the value of labour share growth which we have derived straightforward and stems from the definition of labour share. Here, we have calculated the labour share and labour share growth curve at the aggregate level across decades from Annual Survey of Industries (ASI) data at 3 digit National Industrial Classification (NIC) for Indian manufacturing industries from 1973-74 to 2019-20. The results show that in each decade there is an upward shift in labour share and the reason of this upward shift is the more increase in real net value added than the increase in real wages in each decade. The main cause of this falling labour share trend across decades is the stagnation in real wages. The real wages have not risen a significant level over the decades, and it cannot nullify the effect of huge amount of increase in real net value added. Our policy imperatives might be the rigorous implementation of minimum wage regulations for different industry categories