Wages, profits and productivity in selected industries of India, since 1950 (an econometric study)

In a developing economy like ours, which aims at rapid economic development, together with a fair improvement in the living conditions of the poorer sections of society, specially the workers, it is necessary to have a clear idea about the relationship between wages, profits and productivity, because, in a dynamic setting of a growing economy, not only the entities are subject to change, but their relationships also vary with time. The nature of relationships between these entities has a great deal to do with shaping the course that development might take. The present study is, therefore, an attempt at discovering the nature of these relationships.

The book covers eight major industries, viz, cement, cotton textiles, woollen textiles, jute textiles, sugar, match, paper & paperboard, and iron and steel industries in India. The study observes the close relationship between wages, profits and productivity by applying distinct quantitative econometric techniques. The behavioural attitudes of the employers and employees, the employment and wage-structure relationships of wages, and the consumer price index, productivity and wages in relation to profit these have been carefully analysed. Over the whole period under study, productivity gains are positive for all the industries. Though sometimes they were negative. In fact, labour has always been so even in the years of productivity decline. Wages were fully explained by value added and the consumer price index number. The marginal productivity of labour for all the industries ranged between 23 to 33 per cent of the output.